Liability insurance protects service-providing businesses and individuals from damages awarded in a civil lawsuit due to claims of negligence. In the US, such insurance is usually called errors and omissions (E&O) insurance, but it also goes by the names professional indemnity insurance (PII) and professional liability insurance (PLI). The professional insurance rate for an E&O, PII or PLI policy depends on a wide range of factors, including location, history and perceived risk due to industry statistics.
No-Cost Policies
The old saying goes that there's no such thing as a free lunch, and that's especially true in the world of insurance. Searching online for an affordable professional insurance rate, you'll almost certainly run across websites claiming to offer or facilitate free professional liability insurance. Another old adage applies here: If it sounds too good to be true, it probably is. The only thing free is the quotes, so when you see such claims, use them as a warning sign. A company that is willing to lie to get you through the door is likely willing to lie to keep you there too.
The Internet is an Effective Tool
A professional liability rate can be high, so the big costs associated with these policies scare many small business owners. Their instinct is to find a local option, for the convenience and comfort of face-to-face time. Local options are not inherently bad, but depending on your location, they may be limited. Limited options mean higher rates. When pricing professional liability insurance, use the Internet. The competition is greater and the rates are lower. You can even take those low rates and shop them around to the local options.
Does Cheap Mean Poor Quality?
When shopping for a low professional liability rate, there's always some concern when you find one. Why is this particular professional liability insurance cost so low? It's an excellent question ask. As we established earlier, there are no freebies, so there must be a reason. Keep in mind that rates will fluctuate between companies for a host of reasons. The important thing to watch for is a rate that is well below the norm. Find out why that rate is so low before signing on the dotted line.
What Dictates the Cost?
As we mentioned in the opener, a number of factors affect the cost of liability insurance. Many of these factors are outside your control, such as location, so there's no use worrying about them. The important thing is to get a professional liability rate that is at or below the norm for the factors you cannot control. There are steps that businesses can take to limit risk. Insurance companies can help you determine what they are. Generally, it's a matter of making an investment now for reduced rates long term.
Quality First
In the end, quality of policy and comfort with the policyholder is more important than the professional liability rate. Every business wants cheap professional liability insurance, but the important thing is will that policy protect the company fully when a claim occurs. Purchase this insurance from the perspective that a claim will occur. Prepare for the worst and hope for the best.
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