What is Professional Liability Insurance?
Professional liability insurance covers your liability in case of negligence by staff and Directors of your business against customers. This type of insurance can also be called professional indemnity insurance. If you have a business you will likely have a commercial policy in place to cover your contents and liability for customers while they are on your premise. It may be possible to include professional liability cover in this policy, but there are cases where this is not possible and a separate policy will be required.
Reasons you should have Professional Liability Insurance
If a customer feels you have acted negligently the threat of litigation will be greatly stressful to the whole business. The costs of which can also be high. When a customer sues your business for dissatisfied service, the liability insurance can help you protect you from such claims. The insurance will cover you for compensation and the costs of defending yourself. These are the key reasons it is important to have a policy in place that will safeguard your company and the business’s future.
- Court costs and lawyers fees: International and Spanish lawyer fees are fully included, including the administrative costs and expert witness costs. In addition, Spanish court costs and settlement costs are included.
- Worldwide and USA Cover: When the cover is worldwide the jurisdiction is in the country where the claim is made. This is very important for policies that include the USA. There are very few insurance companies that quote for a business that works in the USA. A qualified broker will be able to source the best options if you work for clients based in the USA.
There are many professions and risks that are complicated and require clauses such as an additional insured to be written into the contract. Again, this is where a broker will be able to communicate with the underwriters to explain the necessary requirements.
Other Key Features
- Coverage for Intellectual property rights: Whereby you would unknowingly use a name or logo for example, which was the same or similar to a competitor’s business.
- Damage to property or causing data loss: An example would be that you spill coffee on a client’s laptop causing damage and loss of data.
- If staff were to sue you for injuring themselves on your premises or due to the business’s negligence, the professional liability insurance would come into play.
- Defamation claims can affect your business’s image. This is where your name is affected by the actions of individuals or groups.
Is the cover obligatory?
The Spanish government is now making it obligatory for the majority of new businesses to have professional liability insurance. Examples of businesses that need professional liability insurance before they open are financial registered businesses in Spain, “Inmobiliario” or Real Estate businesses, consultants of all types from web designers to marketing consultants. Lastly other professions that require this type of insurance are medical and iT consultants, assessors, lawyers, gyms and schools.
What types of professional should have the policy?
Business owners, consultants and professionals that have interaction with customers should think of having cover.
Entrepreneurs and Business Owners
IT professionals and Consultants: Programmers, developers, contractors and IT consultants.
Graphic Designers and Marketing Consultants: Interior designers, graphic designers, web designers among others.
Fitness professionals: Teachers, personal trainers and gym instructors, kick boxing to yoga teachers would be well advised to have cover in place.
Tutors and teachers: Academic or others.
Other Types of Liability Insurance:
Public Liability insurance protects you in the event you are sued for claims from customers on your premises. A standard business or commercial insurance policy will include public liability cover as standard.
Directors and officers (D&O) liability insurance
Directors and officers (D&O) insurance protect the personal assets of company directors and officers and their spouses. The cover is provided in the event the directors or spouses are personally sued by employees, vendors, competitors, investors, customers, or other parties. D&O insurance is more costly than professional liability insurance due to the larger scope of cover.
New businesses often ask the question if the cover is not obligatory should I take out a policy? Even older businesses can ask this question. Costs of running a business are always going up and do not tend to decrease, so it is sensible to cut costs where you can. However, we have seen even big corporate companies come unstuck by not having sufficient cover in event of a law suit which they lose. Staff have ever increasing working rights and so it is not only customers that businesses have to be careful of.
Liability insurance does not have to be very expensive. As brokers we can look at the risk you have, since a coffee shop will not have the same risk as a construction company for example. By contacting a qualified professional you will also be assured of having a policy which is not limited. For example some customers require coverage for work carried out after they leave a clients premises. This type of cover is called a guarantee of work and does cost extra but at least you and your broker can assess the cost and come to a decision whether it is worth including.