In many fields of work, social liability insurance is required. Although not all businesses are accustomed to acquiring them, it is considered a good practice to always allocate sufficient funds for such a policy from your company's budget.
You could be the most careful manager in your company, and you could train your employees to perfection, but none of that will protect you from certain unforeseeable events that may cause harm to your client.
The client may sue your company for something that was not anticipated, or simply for some human error or poor work practice within the customer service chain.
Such an oversight or accident can result in hundreds of thousands of dollars in expenses and can bring down the business that you've worked so hard to build.
That is why it is critical to understand what social responsibility insurance is as well as the benefits it can provide to your company.
We want to provide you with a detailed list of the factors you should consider before purchasing social liability insurance, allowing you to work with peace of mind and professionalism.
It is also known as workers' compensation insurance, professional liability insurance, or civil liability insurance in some workplaces.
This type of insurance covers the costs that a business would incur in the event of a lawsuit being filed by a customer. Claims may arise as a result of service provider malpractice, human error, or negligent acts in providing your services.
Claims of this type can cost the business millions of dollars depending on the type of error or negligence committed, but even in the most minor cases, the sums to be paid can amount to hundreds of thousands of dollars, especially when the cost of legal representation is taken into account.
The factors are so numerous and diverse that it is essential to be able to rely on this type of insurance in order to build a solid business. This will save you from an eventual unfortunate event with your clients and will save your business thousands of dollars, saving you from an economic crisis or even total bankruptcy.
Just as there are numerous types of insurance, there are numerous variants that will influence the cost. But to answer the common question, “how much does professional liability insurance cost?”, consider factors such as the size of your company, the type of industry you work in, the amount of coverage you need, your company's history of lawsuits, and whether or not your company has quality control mechanisms in its service or employee training.
However, if you want an estimate, rest assured that the annual policy of this type of insurance will not be less than $1,500.
It is absolutely necessary, and it is one of the smartest business decisions you can make.
Not only will it save you from having to pay large sums of money that could amount to millions of dollars out of pocket and effectively liquidate your business, but it will also allow you to work and build a company with the assurance that in the event of an unfortunate incident, you will not be the one to cover the costs of the lawsuit.
People are not accustomed to prioritizing their peace of mind, but believe me when I say that it is one of the most valuable assets for you and everyone in your company when you run a business.
It will also allow you to work professionally while maintaining your client's trust. Assume someone sues you for some error or negligence in the services you provided. The natural thing to do would be to hire a lawyer and try to prove that the error or accident was not your fault, but rather attributable to some other factor or even the client himself.
This is a natural reaction because you want to avoid paying the compensation for the mistake, but it has a significant impact on your image because your other clients will see what happens and may lose trust in your company, knowing that they could be the next ones to be in a similar situation.
However, with insurance, you are not required to take this stance. You can accept the mistake and accept the claim calmly because you know the money will not come out of your pocket to cover the indemnity. This elevates you above the circumstances and projects a solid, trustworthy image, strengthening your bond with all of your clients.
The type of insurance you require will have to be tailored to your specific business, industry, or specialty.
There is general liability insurance, which covers claims for third-party injuries, defamation, or copyright infringement.
There is also commercial property insurance, which is responsible for covering all expenses in the event of commercial property damage. If you are renting a space that you intend to use as your headquarters, the owner will almost certainly request this type of insurance, and you will be unable to close the rental contract unless you have it.
Assume a fire breaks out late at night because one of your employees left a scented candle burning on his desk. In addition to the disaster that fire in your business represents, you may be sued by the owner of the premises, which could spell the end of your business.
There is cyber liability insurance as well as workers' compensation insurance. There is a wide range depending on the industry in which you work. We recommend that you carefully consider what type of insurance is best suited to the needs of your industry.
There are many ways to buy social responsibility insurance. Most entrepreneurs turn to a broker or agent who can advise them, providing a thorough analysis of the best option for their business. It is also possible to contact the insurers directly and ask them to do an analysis focused on your needs before starting any investment.
Remember that a lawsuit can be the difference between your company's success and its demise. Even if you win the lawsuit, the money you spend on lawyers may cause your company's financial standing to suffer. It is preferable to plan and budget for insurance costs than to experience regret later on.