Business professionals are human beings. The sad reality is that sometimes people make mistakes. For this reason professional liability insurance is an important part of starting a business and being a business professional.
Professional liability insurance can sometimes be referred to as Errors & Omissions insurance depending on what kind of business you are running. Do not let the terminology confuse you – these are one and the same. For example every insurance professional with a license needs to be covered by Errors & Omissions insurance. If you are an independent agent working from home you need this coverage, and an agency that sells insurance needs to have Errors & Omissions insurance to cover the agents working within the agency. There isn’t a single underwriter that will allow you to submit insurance prospects and applications without the safety net of professional liability insurance.
For the most part, any business providing a professional service (think lawyers, tax preparers, consultants, web designers) needs to have professional liability in case mistakes are made and lawsuits occur. We live in a litigious society and the best way to protect ones business interests is to insure them through as many avenues as possible. If you cover all of the gaps where you are vulnerable then a lawsuit wouldn’t be the end of your career or your business.
Professional liability insurance is just one of the types of insurance you would need to start a business. Of course it’s not mandatory and if you don’t want to pay for it you don’t have to. That being said insurance is one of those things where you need it most when you do not have it. Even if you trust yourself to not make mistakes every business owner must consider that the employees working underneath them can make mistakes as well.
It is best to be fully insured for all aspects you are risking when starting a business and the Errors & Omissions coverage is just a small part of the equation.