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What Contractors Should Know About Professional Liability Insurance

Posted by David Ross on Sat, Jul 30, 2022

What contractors should know about professional liability insurance for contractors in Philadelphia, Newark, Allentown, Reading, Lancaster PA and elsewhereThere are many types of Contractors Insurance to help protect your business in the event of a lawsuit. Insurance is a crucial part of protecting your business. According to Forbes, 36%-53% of small businesses are involved in at least one litigation in any given year, and 90% of all companies are engaged in litigation at any given time. 

General liability insurance helps protect you if you are sued for injuries (other than employees), property damage, libel, and slander.

However, a customer can also sue you for making a mistake, missing a deadline, negligence, or undelivered services. Typically, general liability insurance does not cover this type of lawsuit.

 As they say, “To err is human,” but unfortunately, while “to forgive is divine,” not everyone forgives when a general contractor makes a mistake – actual or perceived. And one lawsuit can cost you a fortune in legal fees and settlements or judgments (if the court sides with the plaintiff) or even put you out of business.

 Thankfully, there is Professional Liability Insurance to help protect your business from this type of lawsuit.

What is Professional Liability Insurance?

Professional Liability Insurance goes by many names, such as Errors and Omissions and E & O insurance. Professional Liability Insurance protects your business if you face a lawsuit claiming you made a mistake in your professional services - whether or not you actually made a mistake.

 Some local and state laws, contracts, or customers may require Professional Liability Insurance. However, even if it isn’t required, it’s a good investment as one lawsuit can put you out of business. According to an SBA study, small businesses reported that legal costs for litigation ranged from $3,000 to $150,000. Furthermore, “Most companies used business assets to pay the damages,” and “owners mentioned that the payment of damages nearly put them out of business, which affected them for a long period of time as they worked to rebuild the business and recoup their losses.”

 Professional Liability Insurance helps protect your business from claims of the following nature:

  • Errors
  • Omissions
  • Negligence
  • Violation of good faith and fair dealing
  • Misrepresentation
  • Inaccurate advice

 Professional Liability Insurance covers the following costs (up to the policy’s limit):

  • Attorney fees
  • Court costs
  • Administrative costs
  • Settlements or judgments

 Professional Liability Insurance does NOT typically cover:

  • Bodily injury
  • Property damage
  • Fraudulent, dishonest, or criminal acts
  • False advertising
  • Employee injuries or illnesses
  • Discrimination or harassment
  • False advertising
  • Patents and trade secrets
  • Any services not specified in your policy

 How Much Does Personal Liability Insurance Cost?

Every business is unique, so the cost of Professional Liability Insurance varies.

 Factors that can affect your Professional Liability Insurance costs include the following:

  • Business size
  • Location
  • Claims history
  • Coverage limits

 You can help keep the cost of Professional Liability Insurance down by doing the following:

  • Properly training employees
  • Providing quality work
  • Drafting well-crafted contracts that set expectations
  • Fulfilling the terms of the contract
  • Keeping schedules realistic
  • Providing quality workmanship
  • Hiring reliable and competent subcontractors
  • Performing and documenting periodic inspections
  • Keeping communication professional and reasonable
  • Ensuring everyone working on the project is adequately insured

 How to Save on Professional Liability Insurance

If you aren’t sure if you need Professional Liability Insurance, reach out to one of the agents at American Insuring Group who specialize in Contractors Insurance.

We understand your unique needs and can help ensure you have the right coverage. As independent agents, we will compare the cost of that coverage with several insurance companies to ensure that you pay the lowest premium for that coverage.

So start saving today by calling us at (800) 947-1270 or (610) 775-3848, or connect with us online.

Tags: Contractor Insurance, Professional Liability Insurance, Commercial Liability Insurance, Professional Liability Lawsuit

Workers Compensation Insurance and Liability Insurance

Posted by David Ross on Sat, Jun 13, 2020

Understanding Workers Comp Insurance vs. Liability InsuranceEvery business in Pennsylvania with one or more employees is required to provide Workers’ Compensation Insurance to its employees – with very few exceptions. It’s the law. It doesn’t matter if those employees are full-time or part-time or even family members. Not having workers’ compensation insurance is a criminal offense. In Pennsylvania, you could face fines up to $2,500 and/or prison time.

Workers’ Compensation Insurance is designed to protect both the employee and the employer. There are two essential parts to WC insurance. The first part is coverage for medical expenses, rehabilitation costs, disability compensation, and lost wages when an employee is injured or becomes ill “in the course and scope” of their job, regardless of fault. It also pays death penalties to the family of an employee who is killed on the job.

According to the National Safety Council, the average cost of a WC claim in 2016-2017 was $40,051, with WC claims caused by injuries resulting from motor-vehicle crashes averaging $78,293. For many businesses, paying that amount of money out of pocket could put them out of business.

The second part of WC Insurance is coverage for employer liability. The first part of WC pays medical costs for work-related injuries and illnesses regardless of fault. However, if an employee feels the employer was negligent, they can file a lawsuit for additional damages in some instances. This is where the second part of WC – employer’s liability – kicks in. It helps employers pay for legal expenses, such as attorney’s fees, court fees, and settlements or judgments.

Types of Claims Employer’s Liability Insurance Covers

Third-Party Action

An employee who is injured on the job and receives workers’ comp benefits can’t sue their employer directly; however, they can sue a third party, such as the manufacturer of a piece of equipment that caused the injury. The manufacturer can then file a lawsuit against your company, creating a third-party action lawsuit.

Consequential Damage

An example of consequential damage would be a spouse who is injured as a result of caring for the injured employee.

Loss of Consortium

If an employee is severely injured or killed on the job, their spouse can file a lawsuit when the injury or death results in the loss of a family relationship.  

Dual-Capacity Suit

A dual-capacity lawsuit can occur if the employer and injured employee have more than one relationship. For example, if you manufactured a product that could have caused the injury, the employee can hold you liable.

What About Commercial General Liability (CGL) Insurance?

CGL covers bodily injury, personal injury, and property damage caused during business operations, as a result of one of your products, or on your business premises. Here are a few examples of when CGL will cover you.

  • A customer falls and hurts themselves while in your restaurant.
  • One of your employees accidentally causes a fire while working on the electrical panel in a customer’s home that causes damage.
  • Someone files a libel or slander claim as a result of an ad that you placed.

One of the most important things to remember about Commercial General Liability Insurance is that it does NOT cover bodily injury to an employee. That is what Workers’ Compensation is for.

 

Protect Your Business While Saving Money

American Insuring Group offers both Workers’ Comp Insurance and Commercial General Liability Insurance, along with any other type of insurance you may need to protect your business. Plus, as independent agents, we compare the cost of coverage among many insurance companies to ensure that you get the lowest price on quality insurance protection. Give our experts a call today at (800) 947-1270 or (610) 775-3848 or connect with us online.

Tags: Workers Compensation Insurance, Professional Liability Lawsuit, Commercial General Liability Insurance, WC Insurance

Improve Your Odds in a Professional Liability Lawsuit

Posted by David Ross on Thu, Jul 28, 2016

Tips for defeding your business against a professional liability lawsuit. Serving Philadelphia, Reading, Lancaster, Allentown, Lehigh Valley, York, Harrisburg, Pittsburgh, Erie, PA and beyond.Litigation is like lightening; it can never be accurately predicted. So, the best defense against both is to avoid them altogether. While it’s possible to seek shelter and stay out of harm’s way during a storm, avoiding a professional liability lawsuit can be much more complicated.

Being diligent in all areas of your business could be an asset if you face a professional liability lawsuit, even if you have professional liability insurance, but it can’t always prevent one.

If you own a small-business and you’re being threatened with a lawsuit, your best defense is preparation. Assume that a lawsuit could be coming at any time and you may be ready if it actually does.

Here are 3 key strategies to maximize your odds of successfully defending your business against a professional liability lawsuit:

#1. Document all communications with your clients

During the course of a lawsuit, your lawyer may ask you for a particular document or certain facts relating to an important incident. If you’re working from memory alone, you’re going to have trouble presenting a cohesive defense. You will have much easier access to information about your lawsuit if you have left a thorough paper trail. Depending on your type of business, that trail might include:

  • Written contracts
  • Work documents
  • Invoices and receipts
  • Confirming emails sent after meetings and phone calls
  • Changes to contracts and proposals

Just keep in mind that overly-complicated documents may hurt your case. If a mediator or jury can’t follow the information in a key document, they could easily assume that your client couldn’t either. 

 

#2. Work with your lawyer

The relationship between lawyer and client can come under considerable strain during the course of a lawsuit. A good working relationship can increase the odds of a positive outcome and reduce your anxiety considerably. You and your attorney are a team. Here are some teambuilding hints to improve your odds of winning:

  • Keep your lawyer informed by disclosing everything that might pertain to the dispute. Don’t hold back. Lawyers are trained to sift through information and determine what is useful and what is not.

  • Prepare summaries, timelines, and other materials. Be as accurate as possible. Your lawyer will base your claims and defenses on this information.

  • Respond promptly to all requests. Your lawyer may have to work under a very tight deadline. The more time you give your lawyer to digest the material you provide, the better job your lawyer can do of using that material to prepare important legal papers.

  • Keep your lawyer apprised of your schedule. You will need to be present at certain events in a lawsuit. Most of these events can be postponed or moved up to accommodate your schedule, but your lawyer must have enough advance warning that you won't be available.

Assess the professional liability lawsuit honestly

Your first instinct after being hit with a lawsuit might be to fight the claim with all available means. After the initial emotions have subsided, however, and you can approach the dispute objectively, you might discover that it makes sense to settle. An honest assessment might make you realize that that you were in error to some extent, or you may come to the conclusion that a sustained legal battle would drain your financial resources.

You should realize that most lawsuits settle, and that the court system is designed to put pressure on both parties to settle. You continually need to reassess whether defending the lawsuit makes economic sense. If you see yourself spending a large amount on legal fees, settling the lawsuit is probably a good move. Remember that your time is worth something. So is your peace of mind.

 

Protection starts with the right business insurance - call today!

Tips-to-defend-professional-liability-lawsuit.jpgTo learn more about Professional Liability Insurance, which helps you pay for the cost of lawsuits and other expenses for which you are legally responsible, and for all your Business Insurance needs contact American Insuring Group online or call us at (800) 947-1270 or (610)775-3848.

Tags: Professional Liability Insurance, Commercial Liability Insurance, Professional Liability Lawsuit