Professional Business Liability Insurance

Do you need business liability insurance? If you’re a white collar professional operating as an independent consultant, the answer to that question is an unreserved yes. The new wave of professional contractors now make up a hefty portion of the UK’s accountancy, legal and IT professions. Many of these professions deal in circumstances that a company may need on a short-term basis, but is reluctant to hire on permanently. Database designers, IT security specialists, accountants and financial consultants are often brought on board for particular projects, but have no place on a firm’s permanent staff. A growing number of companies are turning to what’s called white-collar freelancers for those times when there’s no call for a permanent position, but a definite short-term need.

Are you a white collar freelancer? If so, professional business liability insurance is vital protection for your business. Business liability insurance protects you if a client brings suit against you because an error of yours cost them money or damaged their reputation. The policy is designed to cover the costs of litigation or other legal defense, as well as any judgment or settlement that is reached between your business and your client.

Why You Need Professional Liability Insurance
But, you may be thinking to yourself, what sort of liability could I possibly incur? We’re used to the idea that physicians may incur professional liability if they make a wrong diagnosis or an error in judgment, any professional who offers advice on which others rely to make business decisions can also incur a liability if they make errors in calculations or violate codes of conduct. A few situations that might incur this sort of liability are:

• An error in your calculations results in an underpayment of taxes for your client, with a resulting fine. Your liability may be restricted to payment of the fine, or you may be held liable for the cost of correcting the error as well.
• Your failure to carry out industry standard tests results in a security hole in an IT security system that you designed. The client’s data is breached and they are liable to customers for losses. Their insurance company may come after you for reimbursement of expenses due to your error.

Any time that you give professional advice or provide professional services, you are opening yourself to the possibility of liability. Claims against you or your company cost money to defend. Even a frivolous claim that is determined to have no basis will cost you time and money to defend against. Professional liability insurance will cover the costs of that defense, as well as pay out on any claims that are judged to be due.

In addition, professional liability insurance may cover you for actual physical damages that are incurred through your actions or negligence. Those possible damages include such things as theft or damage to your client’s property while it is in your possession, or damages that result to equipment belonging to your client through something you did. If you knock a laptop off the corner of a desk, or spill coffee down the back of the printer, your professional liability insurance should cover the expense.

Finally, you may find it difficult to find contracts unless you are insured for professional liability. Many businesses that hire independent consultants are now requiring proof of insurance before they’ll sign a contract.

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