As a professional, it's important to protect yourself and your business from any potential lawsuits or claims that may arise. One way to do this is by having professional liability insurance, also known as errors and omissions insurance. However, even with this coverage, it's important to consider adding uninsured/underinsured professional liability insurance to your policy. In this article, we'll explore why this coverage is important and how it can benefit you.

What is Uninsured/Underinsured Professional Liability Insurance Coverage?

Uninsured/underinsured professional liability insurance coverage is an additional layer of protection that covers you in the event that a client or third party files a claim against you and you're not adequately covered by your professional liability insurance policy. This can happen if the claim exceeds the limits of your policy or if the other party doesn't have insurance to cover the damages.

The Risks of Not Having Uninsured/Underinsured Professional Liability Insurance Coverage

Without this coverage, you could be left personally responsible for any damages or legal fees that exceed the limits of your policy. This can be financially devastating and can put your business and personal assets at risk. For example, if a client sues you for $1 million and your policy only covers up to $500,000, you would be responsible for the remaining $500,000. This is where uninsured/underinsured professional liability insurance comes in.

Real-Life Examples

Let's take a look at some real-life examples to illustrate the importance of this coverage:

Example 1: The Missing Policy

A client sues a consultant for $1 million, claiming that the consultant's negligence caused them to lose a major client. The consultant has a professional liability insurance policy with a limit of $500,000, but the insurance company informs them that the policy was never actually issued due to an administrative error. Without uninsured/underinsured professional liability insurance, the consultant would be personally responsible for the remaining $500,000.

Example 2: The Uninsured Third Party

A software developer is sued by a client for $750,000, claiming that the software they developed was defective and caused the client to lose revenue. The developer has a professional liability insurance policy with a limit of $1 million, but the client's damages exceed this amount. The client also doesn't have insurance to cover the damages. Without uninsured/underinsured professional liability insurance, the developer would be responsible for the remaining $250,000.

Example 3: The Damaged Reputation

A marketing consultant is sued by a client for $500,000, claiming that the consultant's advice led to a failed marketing campaign. The consultant has a professional liability insurance policy with a limit of $500,000, but the client's damages exceed this amount. The consultant doesn't have uninsured/underinsured professional liability insurance and is forced to pay the remaining $250,000 out of pocket. This not only puts a strain on their finances but also damages their reputation, as word of the lawsuit spreads.

Benefits of Uninsured/Underinsured Professional Liability Insurance Coverage

Now that we've explored the risks of not having this coverage, let's take a look at some of the benefits:

Peace of Mind

Having uninsured/underinsured professional liability insurance coverage can give you peace of mind knowing that you're protected in the event of a claim that exceeds the limits of your policy or if the other party doesn't have insurance to cover the damages. This can help you focus on your work and provide better service to your clients.

Enhanced Protection

Adding this coverage to your policy can provide an additional layer of protection that can help safeguard your business and personal assets from potential lawsuits or claims. This can help you avoid financial ruin and protect your hard-earned assets.

Competitive Advantage

Having this coverage can also give you a competitive advantage over other professionals who don't have it. It shows that you're proactive about protecting your business and clients, which can help build trust and credibility. This can help you attract more clients and grow your business.

How to Obtain Uninsured/Underinsured Professional Liability Insurance Coverage

If you're interested in adding this coverage to your professional liability insurance policy, the first step is to speak with your insurance provider. They can help you determine if this coverage is right for you and provide you with a quote. It's important to shop around and compare quotes from different providers to ensure you're getting the best coverage at the best price.

Conclusion

Uninsured/underinsured professional liability insurance coverage is an important consideration for any professional who wants to protect themselves and their business from potential lawsuits or claims. Without this coverage, you could be left personally responsible for any damages or legal fees that exceed the limits of your policy. By adding this coverage to your policy, you can have peace of mind knowing that you're protected in the event of a claim that exceeds your policy limits or if the other party doesn't have insurance to cover the damages. This can help you focus on your work, protect your assets, and grow your business.