There are always responsibilities and risks to be faced as you carry out an professional activities. Many events are unpredictable and can often affect a third party. This is why it is very important to take out professional liability insurance or errors & omissions (E&O) to protect yourself against possible accidents and adversities and thus avoid major problems.
Companies should purchase insurance coverages based on the needs of their businesses. It’s also important to consider the economic situation of the entrepreneur because not getting an insurance policy means that they will pay for any damages and injuries out of pocket.
Further, there are many unforeseen events that may be caused by third parties or factors beyond their control. The safest thing to do is to have insurance because you can never know what situation could put a third party in danger and affect your business.
What is professional liability insurance?
Service-providing individuals take professional liability insurance to cover damages to a third party in a non-contractual manner. This means that it was caused by an accidental event not covered under the contract but during the execution of the project activities.
In general, professional liability insurance may cover material, personal or property damage caused to third parties by the insured or his responsible staff, as well as the payment of compensation for such damage. They can also cover legal defense, criminal defense and claims for damages from their contractors.
Why do you need professional liability insurance?
As we have already mentioned, some areas of work carry more risk than others. Sectors such as construction are much more likely to experience accidents due to the nature of the job. Trades in this industry comprises surveyors, masons, carpenters, electricians, and more.
So, this type of insurance is essential because some losses are huge and can be out of reach, leading to costly lawsuits.
For example, electricians must comply with the law by purchasing professional insurance. More specifically, electricians are constantly exposed to many complaints. Due to the nature of their work, they can easily cause damage.
It is also important to keep in mind that they are working with hazardous materials which can cause accidents. Working conditions on a job site are already designed to be performed with caution, as they often involve working in difficult situations.
It is essential to keep in mind that if you do not have an insurance policy in these cases, given the risk involved in these activities, the self-employed person or the entrepreneur could be subject to criminal prosecution or pay a huge amount for damages or injuries caused.
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