Probably the most important factor in determining what type of Professional Liability Insurance to buy and how much coverage is needed is the occupation of the professional or business owner buying the insurance. While any professional that does work for a fee can benefit from a Professional Liability Insurance policy, it is most important for certain professions that are prone to lawsuits over mishandled work. Doctors are probably the prime example; in fact, they are generally required by law to carry Medical Malpractice Insurance because of the high cost of medical lawsuits that are so prevalent in this country. Engineers, lawyers, and certain financial professionals may also have a large exposure, and other businesses, depending on the kind of work they do, may also find that they are at risk for a lawsuit. Obviously, while the professions that are most likely to be sued are the ones that are the best candidates for a Professional Liability Insurance policy, these professions usually also face higher premiums.
The occupation of the insured business will also determine what type of Professional Liability Insurance is purchased. In some professions it is more common for an employer to purchase a policy that covers a group of employees, while in other professions individuals will need to buy their own coverage. The dollar amount of Professional Liability Insurance is also directly influenced by the occupation of the insured. Doctors in certain high-risk specialties such is obstetrics or plastic surgery may need to carry millions of dollars of coverage. A Web site designer or wedding photographer may require far less.
Budget for Premiums: The cost of Professional Liability Insurance can vary quite a bit, depending on the occupation of the insured, the annual revenue of the business, the loss history, and the number of employees, as well as the dollar amount of coverage that is being purchased. Other factors, such as the location of the business, can also come into play in determining the cost of insurance. Perhaps surprisingly, certain areas of the country are far more prone to lawsuits than others, and some municipalities are known for large jury awards that can affect the total costs of claims and, ultimately, the cost of insurance.
According to the United States General Accounting Office, a survey of Medical Malpractice Insurance premiums showed a range from $17,000 a year in Minnesota to $201,000 a year in Dade County, Florida. Meanwhile, other professions can obtain $1 million in coverage for less than $150 a month through specialized insurers that focus on insuring a variety of types of businesses.
In general, the budget for premiums will depend on all these factors and more. But the benefits of Professional Liability Insurance can be hard to ignore when one considers how much defending a business against a large lawsuit from a client could ultimately cost.
Professional Liability Insurance Directory