When Should Consultants Buy Professional Liability Insurance?
March 11, 2013
As an independent contractor, chances are you have already established your own insurance policies to cover your health as well as other important items needed for the functioning of your business. However, have you considered purchasing business insurance, and do you know when to buy professional liability insurance?
First, you are obviously very knowledgeable in your field; however, this does not eliminate the possibility that a dissatisfied client may seek damages for obligations you did–or did not–fulfill. This type of insurance is called errors and omissions insurance, and it covers you in the event a client sues you for something you did (error) that should not have been done as well as for something not done that should have been performed. While the client’s perception of your work is not always correct, you could lose tons of money in legal fees alone attempting to defend yourself against companies with large budgets and legal departments.
If you are a subcontractor for a larger company, increasingly more companies are requiring you to carry professional liability insurance. However, if you are not required to do so, you may wish to assess your risk if you are part of a changing, high-risk industry (i.e., technology, healthcare, etc.). You should also be aware that not every client is honest, so you should always have a well-written contract and insurance to protect you against the unknown.
For an honest, no-obligation assessment of your risk, contact the professionals at Central Insurance Agency for a confidential review.