Starting a professional services business is a great undertaking. You are leaving behind the safety of a steady paycheck for the uncertainty of producing your own income. It is not an easy journey, but it can be rewarding. No longer will you depend on the direction of someone else to determine your responsibilities. It is up to you to do what’s necessary to succeed.
When working on your own, you have to wear many hats. You are President and CEO, but you are also in charge of sales, marketing, administration, etc. You may have to perform, by yourself, all the tasks that need to be completed in your new venture.
With hard work, and some luck, you can make your business self-sustaining. It is an important goal to strive for early on. After that, you can focus on growth. The level of income you can attain is only limited by your entrepreneurial drive and the opportunities you can convert.
With opportunity comes risk. As a professional services provider, you help clients achieve specific objectives. You perform your work to the best of your abilities. However; should any problems arise, the burden of fixing them falls entirely on you.
Insurance is a great way to deal with risk. It allows you to exchange the uncertainty of loss for a fixed premium expense. An insurer will indemnify you for the covered losses that you suffer, as per the terms of the policy, and help you recover.
Liability insurance is crucial for the protection of your business. It covers your risk of being sued for damages that you are held legally responsible for causing to third parties. Even when you are not at fault, having to defend yourself from a lawsuit is a burden that could have catastrophic impacts on your bottom line. Liability insurance can cover your defense costs, protecting your capital from having to be spent in attorney’s fees.
General liability and professional liability are two important insurance coverages that professional services companies need.
General Liability Insurance
General liability insurance provides coverage for third party bodily injury and property damage claims from the business’ premises or operations. While these are not major exposures that come to mind in professional services, being properly insured is still important.
Accidents are bound to happen. A client visiting your office may trip and injure himself. You can be held legally responsible. If you are not insured, you may have to pay for the awarded damages out of your own pocket.
The coverage provided by the general liability policy is broad. However; it leaves professional services firms exposed to losses that do not result in bodily injury or property damage. That is why the second type of policy is just as important.
Professional Liability Insurance
Professional liability insurance indemnifies you for the amounts that you are held legally responsible to pay to third parties as a result of wrongful acts. In the policy, wrongful acts may be defined as an act, error or omission in the professional services rendered or that should have been rendered by you. These are major exposures for professional services firms, they are only covered under professional liability insurance.
If the work you perform results in a financial loss to your client, due to an alleged mistake on your part, you may be held legally liable for damages. The professional liability policy will respond to defend you in a lawsuit and to pay for the damages awarded to the affected party.
As a business owner, you are responsible for knowing the exposures that your new venture faces. You have to set a plan to address them. Otherwise, an unexpected loss can derail your project and prevent you from reaching your objectives. It can actually lead to the failure of your business.
Working with an insurance broker is important. They are professionals in the area of risk transfer and management. They can help you understand your risks and develop an insurance program that provides comprehensive protection for your business.
With all the resources available, an accident should not be a reason for business failure. With proper planning, and the right instruments in place, you can navigate the hardships that a loss can bring and recover. You can feel secure knowing that there is support you can count on to get back to your regular business operations.
Risk Reinsurance Holdings, Inc. is an insurance brokerage company based in South Florida. We can help protect your professional services business against loss. You may call us for assistance with your small business insurance coverage needs. You may also visit the link below to submit an inquiry.
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