Firms in the professional services industry need a comprehensive insurance policy to protect them from legal risks and financial liabilities over the course of running their business.
For complete coverage, professional firms have to consider various forms of insurance that typically include professional liability coverage or errors and omissions insurance, workers’ compensation insurance, and general liability insurance.
Here’s everything you need to know about professional liability policies and how to protect your professional service business from financial loss.
Professional services refer to a wide array of occupations in the tertiary sector of the economy. These include lawyers, architects, accountants, consultants, and other specialized knowledge-based services provided to other businesses in the economy.
The professional services industry is valued at around $6,382.56 Billion as of 2023, with a compound annual growth rate of about 6%. It’s expected that the industry will reach $7,770 Billion by 2027. However, signs of economic cooling have impacted the industry as clients become more cautious about their expenditures.
The growth of new technologies, such as Artificial Intelligence, poses new challenges and opportunities for the professional services industry. By adopting artificial intelligence, data analytics, and other technological advancements, firms can enhance their productivity and efficiency, serve clients better, and maximize their revenue.
Why is Insurance for Professional Services Companies Important?
Protection Against Lawsuits
Obtaining professional liability insurance coverage can help protect you from any lawsuits arising from alleged professional errors, negligence, or malpractice in your services. If your clients sue you, insurance helps cover legal and settlement costs and protects your company from financial harm arising from these claims.
Financial Security
Financial liabilities arising from lawsuits can be a major reason for a company going bankrupt. Often, even if a professional services company is not at fault, legal fees can be quite substantial and end up being a huge financial burden. Professional liability insurance helps cover all these expenses and helps you ensure that your company is financially secure.
Client Confidence
Having adequate professional liability insurance coverage can help clients feel more confident about their decision to work with your professional services company. Clients can feel at ease knowing that your business, and by extension, their business, is financially protected and that there is a safety net present in case of errors or unforeseen events.
Industry Requirements
A professional liability insurance policy can be required in some industries, such as accounting or law. It’s important to get insurance so that you remain compliant with industry regulations and allow your business to operate smoothly without the risks of non-compliance.
Professional Services Insurance Coverage & Policies
These coverages form the foundation of any risk management program for Professional Services companies:
General liability insurance covers claims of bodily injury, property damage, and personal or advertising injury that can arise from your business operations. Professional services companies frequently interact with clients, vendors, or the public, either in their own offices or other locations. This policy ensures protection against potential lawsuits or claims from accidents, injuries, or certain types of negligence.
Cyber liability insurance offers coverage against losses resulting from data breaches or cyberattacks on a company’s electronic systems. Professional services businesses often handle sensitive client data, making them targets for cyberattacks. Given the rising threats of hacking, phishing, and other cyber crimes, this insurance provides financial protection against potential breaches and the subsequent costs
E&O insurance, also known as professional liability, protects against claims arising from mistakes or negligence in the delivery of professional services. Every professional service company is susceptible to human error. E&O provides a safety net against potential lawsuits or claims resulting from unintentional mistakes, omissions, or perceived failures in delivering services.
Workers’ compensation insurance provides medical benefits and wage replacement to employees injured during the course of employment. Regardless of the industry, accidents or injuries can happen in the workplace. This policy ensures that companies can provide for their injured workers while also protecting themselves from potential lawsuits related to workplace injuries.
EPL insurance offers coverage against claims arising from employment-related issues, such as discrimination, wrongful termination, harassment, and other employment-related allegations. With diverse workforces and varied interpersonal dynamics, professional service companies can be vulnerable to employment-related disputes. EPLI acts as a safeguard against the high costs and potential damages of such claims.
These policies are essential for or can be tailored to the needs of companies operating in the professional Services space:
Intellectual property
Intellectual property
Intellectual property (IP) insurance protects businesses against the costs and losses related to IP disputes, including infringement claims concerning patents, trademarks, copyrights, and trade secrets. Professional services companies often rely on proprietary methods, tools, and brand identities. IP insurance safeguards their unique assets and innovations from potential misuse or infringement, allowing them to defend and enforce their rights without fear of overwhelming legal expenses.
Hired and non-owned auto (HNOA)
Hired and non-owned auto (HNOA)
HNOA insurance provides liability coverage for vehicles a company hires (like rental cars) or vehicles owned by employees used for business purposes, protecting against property damage and injuries to third parties. Employees might occasionally use personal or rented vehicles for business-related tasks. HNOA ensures that the company is protected from potential lawsuits or claims resulting from accidents involving these vehicles during business operations.
Crime
Crime
Crime insurance covers a business against losses from various forms of business-related crimes, including theft, fraud, embezzlement, and forgery. With monetary transactions and sensitive data at the core of their operations, professional services companies are susceptible to internal and external criminal acts. Crime insurance provides a financial safety net against such occurrences, ensuring business continuity.
Directors and officers (D&O)
Directors and officers (D&O)
D&O insurance protects directors and officers of a company against personal losses if they are sued as a result of serving that company. It can also cover the legal fees and other costs the organization might incur as a result of such a lawsuit. Leaders of professional services firms often make decisions that could lead to disputes or legal action from stakeholders, competitors, or employees. D&O insurance ensures these key individuals can operate without the personal financial risk associated with potential litigation.
Professional Services Insurance Costs
Professional liability insurance costs typically range from $500 to $1000 annually. However, bigger firms can expect to pay much more to protect their assets.
Your firm will likely need different insurance policies, including professional liability coverage, general liability coverage, and other forms of coverage such as workers’ compensation, etc.
Your professional services insurance costs can vary greatly depending on the size of your business and the professional services you offer.
The cost of insurance will also be affected by your risk exposure, the structure of your insurance policy, and the history of your claims. The number of employees you have is also a vital factor for the cost of your insurance, as a higher number of employees increases the professional risks your business may face.
Types of Professional Services Companies That Need Insurance
Navigating a commercial insurance claim is often challenging, often fraught with confusion and multiple unknown factors. The following four-part series outlines the ins and outs of commercial insurance claims:
Professional Services Frequently Asked Questions (FAQ)
The cost of insurance for Professional Services companies will depend on several things, including the company’s size and development stage. Other factors include:
Exposures: risks being insured
Company practices: views on safety, compliance, and risk management
Program structure: the amount of deductible and willingness for a company to assume more risk
Claims history: the type and amount of past claims against the company
Professional services insurance or professional liability insurance coverage may be required in certain situations and industries. For example, healthcare and legal industry businesses may be mandated by law to have professional liability insurance, while other industries, such as marketing, may not need it. Certain clients can also require insurance to protect their financial well-being.
However, getting professional liability insurance is the best course of action as it protects your business from legal liabilities arising from settlements and legal defense costs due to lawsuits.
The amount of professional liability insurance coverage you need varies greatly according to the needs of your business.
When getting professional liability insurance, you must consider various factors such as the nature and size of your business, industry standards, risk tolerance, and any contractual and regulatory obligations you may have.
You can get a professional liability policy through any registered provider, such asFounderShield. Simply visit Foundershield’s website and get an insurance quote based on the unique nature of your small business. You can adjust the business insurance policy to your liking and decide your coverage limits, deductibles, and premiums.
Once you’ve agreed to a policy, all you need to do is make monthly payments to ensure your business remains protected.
Business liability insurance protects your company if it’s held legally responsible for damages caused to a third party. This could include bodily injury, property damage, or data loss. For professional services companies, this is usually in the form of professional liability or general liability insurance.
Absolutely, insurance policies can often be tailored to the specific needs of your Professional Services company. Your provider can help you select the right types of coverage, limits, and deductibles based on your company’s risk profile and budget.
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Finding Professional Services insurance coverage doesn’t have to be painful. We aim to make the purchasing experience as streamlined and intuitive as possible.
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Our in-house team is tapped into the latest developments in your industry, proactively ensuring you’re covered.
Jonathan Selby, General Manager
Meet your specialist
Jonathan spent the first five years of his professional insurance career working as a generalist broker at a traditional firm on Long Island. Intrigued by how to leverage technology in the industry, he joined the Founder Shield team in 2016 and quickly grew into his current leadership role of General Manager. Jonathan works to oversee client strategy and communication, and has fostered a culture of providing unparalleled service and risk consulting for some of the fastest growing companies in the world. Outside of work, he can be found on the basketball court and chess board — but not at the same time.
Founder Shield is a leading insurance provider that specializes in offering comprehensive coverage for Professional Services companies, offering numerous benefits and advantages over traditional insurance providers. Here’s a breakdown of some of the key features and benefits that you’ll enjoy with us:
Benefits of Choosing Founder Shield:
Industry Expertise
Founder Shield is focused on protecting rapidly evolving Professional Services startups. We ensure that our products are tailored to meet the unique needs of Professional Services businesses.
Customized Solutions
Founder Shield offers bespoke insurance policies that are designed specifically for each client’s needs, ensuring comprehensive coverage that addresses the unique risks associated with Professional Services operations.
Fast Quotes
With Founder Shield’s streamlined quoting process, you can receive a personalized quote for your Professional Services insurance quickly, allowing you to make informed decisions fast.
Ease of Use
Founder Shield’s user-friendly digital platform makes it easy to manage your insurance policies, submit claims, and access important documents whenever you need them.
Dedicated Support
Founder Shield provides exceptional customer service, with dedicated account managers who are always available to assist you with any questions or concerns you may have about your insurance coverage.
Scalable Coverage
As your manufacturing business grows, Founder Shield’s insurance policies can grow with you, ensuring you always have the right level of coverage for your changing needs.
Founder Shield is a preferred choice for Professional Services businesses because of our specialization in the industry. We offer flexible and customized insurance policies, a speedy quoting process, and exceptional customer service with dedicated account managers.
Great service – proactive, responsive, go beyond what I have expected from previous providers. The team do a wonderful job
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