In today’s technology-driven world, it’s practically a given that any business that uses software and other digital services will be providing those services through an independent technology business. But while autonomous technology businesses are popping up like never before, they’re also a bit less common than they should be. That’s because technology businesses can have a high risk of being sued due to the nature of their work.
That being the case, technology business owners must protect their assets and business operation. Getting professional liability insurance is one of the most important steps you can take to protect your business against the risk of being sued.
What Is Professional Liability Insurance?
Professional liability insurance is a form of insurance that protects you and your business from being sued. It is sometimes called “errors and omissions insurance” or “malpractice insurance.” The latter two terms are synonymous: “malpractice” refers to the concept of being sued for professional negligence, which is what this insurance protects you from.
Types of Professional Liability Insurance
There are two main types of professional liability insurance: bodily injury coverage and property damage coverage. The range you choose depends on the level of risk your business poses. Bodily injury coverage protects you and the people who work for you if someone is injured. Property damage coverage protects against damage to your business’s property.
If something is damaged while your business is covered under this policy, you’re legally protected against the cost of repairs or replacing whatever was damaged. Bodily injury and property damage coverage come in two varieties: personal and commercial. To choose the correct range, you need to know the difference between the two types of risk. Let’s look at this in more detail below.
Why You Need Professional Liability Insurance
One key reason to get professional liability insurance is to protect yourself against being sued. Suing a business is expensive, both financially and in terms of time. For instance, if you were to sue someone who injured you, you would have to file a lawsuit and court.
If you win the case, you’ll get a judgment against the other party. Then you’ll have to pursue your decision, which means hiring a lawyer and filing papers with the courts. The time spent in the legal process is time not spent doing business. If you don’t have enough money to pay for a lawsuit and associated legal fees, you could lose revenue and even close your business. That’s why it’s essential to protect your assets and business operations as best as possible.
Finding the Right Coverage With Professional Liability Insurance
There are several factors to consider when choosing the right level of coverage for your business. It’s a good idea to start by figuring out your potential liability. Then, you can use your insurance company to help you figure out the right amount of coverage.
One way to figure out your potential liability is to do a little research. It would be best to look at similar businesses in your field to get a rough idea of the level of risk involved in doing what you do. You can also ask your lawyer or accountant for advice. They can help you understand who you’re dealing with and what level of risk you pose.
Common Mistakes When Selecting Professional Liability Insurance
There are a few things to watch out for when selecting professional liability insurance. One is that you need to get coverage that protects your assets. If you don’t have assets to protect, you won’t have much to sue over if you’re sued. Another mistake is to get coverage that’s too expensive or too broad. This is especially true if you’re an unlicensed business.
A comprehensive policy can be too costly to protect a narrow business. It would be best if you struck a balance between coverage and affordability. Finally, it would be best to be careful not to overstate the risk of being sued. Insurance companies often assess your potential liability based on the nature of your business and how likely it is that someone will be injured.
If you own or operate a business that uses software or digital services, you need professional liability insurance. While being sued is low, it’s still a risk you need to take seriously. It’s important to note that professional liability insurance is only one part of a business’s overall risk management strategy.
You still need to follow all of the other steps in this guide, including hiring a qualified insurance agent, filing proper forms with the state, and keeping accurate records. While the risk of being sued is low, it’s still essential to protect your business from it. That’s why it’s so necessary that you get professional liability insurance for your technology business.