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    Who Needs Professional Liability Insurance?

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    who needs professional liability insurance

    Most self-employed persons who provide a professional service should purchase professional liability insurance, also known as errors & omissions insurance. This type of policy protects you and your business from claims of negligence, misrepresentation, and errors or omissions.

    For example, Sue’s a construction contractor. She helps her clients renovate their homes and does everything from kitchen remodels to basement apartment constructions.Sue’s renovating an investment property. There’s a hard deadline because the landlord already has tenants moving in on a specified date.

    If Sue faces a sudden illness and can’t finish the project before the tenants move in, it might lead her client to a financial loss. The client may then file a lawsuit against Sue for compensation.

    The right professional liability insurance protects Sue in this situation. It can pay for the legal fees and damage awards that remedy this ordeal. Sue then comes out paying little or nothing out of pocket.

    A lawsuit from an unhappy client can create enormous costs. We’re talking about tens of thousands of dollars — maybe even more! But professional liability insurance is here to help.

    This article goes into depth about who needs professional liability insurance, explains why you should purchase a policy, and describes when liability insurance is mandatory.

    Who needs a professional liability policy?

    Self-employed people providing services need professional liability insurance in Canada to mitigate the risk of lawsuits. This includes:

    • Freelancers that offer services like design, copywriting, or web development

    • Trades professionals like plumbers, roofers, or contractors

    • Health practitioners like acupuncturists, personal trainers, and counsellors

    • Business professionals like financial advisors, accountants, consultants, and bookkeepers

    • Beauty professionals like eyelash technicians, hairdressers, and pet groomers

    • And much more!


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    Professional liability insurance is core to these businesses’ daily operations. It mitigates risks and provides peace of mind to owner-operators that their service doesn’t churn out expensive legal liabilities.

    Why should I get professional liability insurance?

    Sue’s story provides a great example of when a professional liability policy can save your business and wallet. But it’s not only missing deadlines that can land a lawsuit on your desk. Negligence, misrepresentation, and errors and omissions also include:

    • Errors or oversight: A finished deliverable contains a mistake that leads to a financial loss for your client

    • No deliverable: You couldn’t provide your client with the promised service

    • Breach of contract: You don’t uphold all the promises as per the contract with the client

    • Copyright infringement: Finished work ends up being the target of a copyright claim

    • Poor quality of work: Your work didn’t live up to the advertised standard

    You might believe your years of experience, attention to detail or extra caution can keep you out of these situations. However, a client might sue you even if you aren’t at fault. A person only needs to perceive you as negligent in filing a claim.

    Related read: Insurance 101: What is Vicarious Liability?

    Suppose Erik’s a plumber. He fixes a client’s toilet to a perfectly acceptable standard. He believes his job is done, but a week later, the client calls, saying that their house flooded due to his work. Erik did nothing wrong, and many other factors could have caused the flood. But the client still has the right to sue.

    In this case, Erik is still liable to upfront legal defence costs. It’s not until he proves he’s not at fault that he may receive compensation from the client for his legal fees. Some in Erik’s position may even agree to a settlement because it’s the cheaper alternative.

    No matter what, professional liability insurance can pay for Erik’s costs.

    Related: Is professional liability insurance tax-deductible

    Is professional liability insurance mandatory?

    Professional liability insurance remains an option — until it isn’t! It’s common for clients to mandate independent contractors and freelancers to have adequate liability insurance as part of their legal relationship. This requirement ultimately reduces the client’s risks.

    When you’re insured, your clients know they can claim your policy if something goes wrong.

    So suppose you commit an error leading to hundreds of thousands of dollars in losses for your client. They would likely sue for compensation. But if you don’t have hundreds of thousands of dollars to compensate them, there’s little they can do.

    A professional liability policy ensures your client that money’s available if they file a claim.

    Further, individuals who aren’t insured often avoid taking the blame for their mistakes. If they accept their negligence, it may mean paying out of pocket. The uninsured professional may push the responsibility towards the client instead.

    This back and forth creates enormous stress for both parties. However, the proper liability insurance remedies this issue. Because the insurer ultimately pays out any compensation, a freelancer who failed to meet a hard deadline may accept responsibility because their policy pays compensation costs.

    These risks are top of mind for clients hiring independent contractors. When you have the correct liability policies, you ease client concerns. They have one less thing to worry about and one more reason to hire you for the job.

    Having the right insurance also makes your business look professional. It shows that you’ve thought about your business’ and your client’s risks and took steps to mitigate them. You’re not just the hobbyist running a freelance business for a bit of extra cash.

    Professional liability insurance is affordable with APOLLO, Canada’s largest online insurance marketplace.

    Get a free quote and purchase professional liability insurance in under five minutes with our online portal. Best of all, you can quote, purchase, and bind your policy from the comfort of your own home and access the portal 24/7 and from any device.

    Related: How Much Does Professional Liability Insurance Cost?


    APOLLO Has You Covered

    We can help you understand the benefits of Business Insurance, and get the kind of protection you need in minutes.

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    Originally published March 2, 2022, updated August 25, 2023

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