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The answer to this question produces a long list. Anyone that needs a license to provide any publicly acccessible
product or service needs professional liability insurance. Professional liability gives coverage for when someone is injured
by a product or service you provide or even advice from you to obtain a certain product or service.
This is not
the same as the liability for slipping and falling or any other personal liability of the injury variety. The general liability
policy will cover these claims. The type of injury that comes under professional liability is like charging a fee for servicing
a computer and the owner of the computer claims you were negligent in servicing the computer and caused a business outage
for the computer owner due to this negligence. Another example is if an insurance agent omits to tell a policy holder about
a mandatory coverage option. That policy holder can claim against the agent if they need to make a claim concerning that coverage
and it is not on their policy without a signature form rejecting it.
In the high dollar arena of the court system
a provider of professional services can not afford to even fight an invalid claim. At least not until there is tort reform
that allows recovery of legal expenses from someone that files an unsubstantiated claim. But that is also a problem when it
comes to professional liability claims, determining if a claim is unwarranted is difficult so an agent will still have the
basic expense of proving a claim is invalid.
Professional liability insurance will cover the cost of fighting such
claims and carry the limits that the common business cannot pay if found at fault. Most business affiliations require a prospective
associate to carry at least a $1,000,000 yearly policy in order become an associate as in franchises.
Professional
liability is also the kind of insurance doctors and lawyers carry to protect themselves. As an insurance agent I have to carry
this kind of coverage but I cant imagine how much more the premium is for doctors and lawyers since the basis for claims are
in the hundreds of millions for doctors and probably the tens of millions for lawyers. Most business affiliations I seek only
require one million dollars incoverage which is raising in premium as time passes instead of reducing for no claims like most
personal insurance policies.
I imagine many small businesses ignore the need for professional liability and opt
for a buisness owners or general liability policy which do contain coverages they need but don't extend to claims
of neglect or omission of advice or performance. Even if you are a one person sole proprietor operation, you are still liable
if you have a professional license to perform a service.
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