Businesses face new challenges on an almost daily basis. Whether it’s something minor—such as clients rejecting a proposal—or dealing with lawsuits, entrepreneurs have to take risks in order to make sure daily operations are not put on hold.
The best way to avoid risk is to eliminate chances of problems ever occurring. This is why, it’s important to plan ahead and plan strategically.
In case a client suffers financial loss through your business, avoiding legal costs and bad reputation is vital.
How Professional Liability Insurance Works and its Benefits
Professional liability insurance is must-have for every business if they want to survive. This is because it not only helps cover for financial loss, it helps enterprises at fault through financial difficulty.
This is especially helpful for small-scale businesses. Because multinationals and corporate organisations have limited liability, small-scale businesses suffer additional loss. This is true for sole trader start-ups.
In case of any damage incurring to a client, sole-traders are directly responsible. Furthermore, their personal assets are on the line. If they declare bankruptcy, their house, car and personal belongings are taken away to compensate for damages.
Perhaps one of the best policies of personal liability insurance is its affordability and time-saving protection. If your business installs security cameras and one of the cameras you’ve provided a client fails, causing him great financial loss through theft, you can be sued. But if you have professional liability insurance, you will not be required to pay from your own pocket.
Another bonus is it reduces premium expenses!
For some businesses, affording insurance can be difficult because of the added expenses of premiums.
One of the best features of professional liability insurance is its ability to reduce premium costs! You can review the factors that result in high expenses and revise them to fit your requirements.
Make sure risks in your organisation are limited. When there are no risks, you won’t be seen as a potential threat. Therefore, you’ll be able to reduce expenses and get discounts!
What Professional Liability Covers and Does Not Cover
Before deciding to get insurance, it’s important to know what your legal rights are and where you stand. You would not sign a contract with a client without reading it first; why should insurance be any different? In Australia, it depends on the province and territory that you reside in. These are generally covered:
- Protection against defamation
- Loss of data
- Loss of goods
And here is what is not covered:
- Bodily harm
- Fraudulent acts
- False advertising
- Employment matters
- Trade secrets and patents