Without professional liability insurance in California, a business can be sued for any amount if it causes financial loss or injury to someone. Sometimes businesses are sued by other firms over contractual disagreements. The bigger your company, the more likely you'll need professional liability insurance, aka errors and omissions (E&O) coverage.
Professional liability insurance pays for legal fees when your company gets entangled in various types of litigation. There are various types of professional liability insurance to consider, such as:
This coverage is exclusively available to medical and healthcare professionals. While these cases are very difficult to prove in court, doctors must still protect their personal assets by carrying this coverage.
D&O coverage protects business leaders when they face claims of leaking confidential information or making unprofitable investment decisions.
Medical professionals are top targets for litigation partly because medical treatment is very costly for patients with limited medical insurance. So when a hospital charges thousands of dollars for procedures that lead to errors, patients often demand compensation. In worst-case scenarios, if a hospital makes a deadly error due to negligence, it can face a heavy lawsuit well into six figures.
A wide range of scenarios exists where professional liability insurance is necessary. Financial advisors face lawsuits if they fail to disclose the risks involved with investments they recommend. Contractors who perform substandard work can get sued for mistakes made by their crew or subcontractors.
Any entrepreneur moving to California should research state economic conditions and regulations for businesses. Be aware that different industries have different insurance requirements in the state.
California has traditionally been a leading state for job growth in America but has seen slower growth over the past decade. The state's strongest labor market is typically the San Francisco Bay Area, home to Silicon Valley tech giants.
The state agency that regulates insurance is the California Department of Insurance. While commercial liability coverage is not a state requirement, the state puts no caps on lawsuit settlements. That's another important reason to carry E&O coverage.
Professional liability coverage is crucial for professionals who deal with high stakes, such as doctors and lawyers. Contact our experts at CF & P Insurance Brokers to learn more about how you can protect your personal assets with professional liability insurance.
