It’s essential to understand the significance of having professional liability insurance.
When businesses expand, it’s easy to celebrate record sales quarters and new customers. However, it’s also simple to overlook the risks of that expansion, especially for big companies. This is why it’s essential to understand the significance of having professional liability insurance. The more you know, the better equipped you will be able to make the right decisions and reduce risk for your growing company.
What is Liability?
Liability refers to being responsible for something, and business liability comes in various forms. This may include financial and legal responsibilities. In general, a business liability is a regular customer or client incident such as bodily injury or property damage. During COVID-19, liabilities consisted of the spread of the virus to customers and employees missing work deadlines because of the virus. Therefore, companies that neglect these could be held responsible or liable for damages.
Risk of Liability in Expanding Businesses
Growing companies can lead to changes that expose businesses to additional risks and liabilities. These changes may include:
- Higher employee numbers
- Larger data sets
- Increasingly complex operations
- More sophisticated supply chains
As companies grow, these factors may change to accommodate new products, orders, services, and business lines. With a significant capacity for risk, the importance of a professional liability insurance becomes more evident.
Creating an LLC
Making an LLC is the only solution to protect yourself from your company’s legal and financial liabilities. An LLC can take over debts separately from you personally. This typically means you will not be personally responsible for repaying the company’s debts. Also, an LLC can safeguard you in most cases from legal liabilities because the company is treated as a distinct legal entity that may be held responsible for negligence.
Purchasing Professional Liability Insurance
A professional liability insurance protects your company’s financial interests and you in case of third-party claims or lawsuits. In addition, this insurance type covers direct financial liabilities you incur, such as a customer hurt on the company property or medical costs from an employee. Plus, some commercial business insurance policies benefit all companies, while others protect only against risks for specific business types.
Often, accidents may lead to massive legal bills that can impact your company’s financial health. So, you should secure professional liability coverage if your small business provides work and services. Overall, your business should have liability protection because it may cover missing project deadlines, work omissions, or providing ineffective business advice. Contact MWE Partnership at 410-394-9617 for more information on obtaining liability protection if you want to prevent lawsuits against your small business.
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