Professional Liability Insurance in Texas: The Ultimate Guide
Living in Texas as a professional can be hectic if many people rely on your expertise. Customers pay for your services, opinions, and advice. So you should be ready in case some problems arise. You have to make sure that you are covered by the consequences of claims that may arise from your advice. Professional liability insurance is the best way to protect you and even your business against legal defense costs resulting from your customer’s claims of negligence.
In other professions, insurance for professional liability can be malpractice insurance or errors and omissions insurance. However, the core concept is the same: to protect a professional from negligence lawsuits from their clients.
Negligence lawsuits are about failing to perform what is expected from a professional, your or your business services, based on the contract, alleged misinterpretations, and other claims. They claim financial loss for the client based on allegations.
You don’t have to worry about the costs if you purchase professional liability insurance in Texas. It can give you or your business a lot of protection for a lesser amount than you expected.
Professional liability insurance is not required in Texas, but it is highly recommended for business owners. Here’s everything you need to know.
What Is Professional Liability Insurance?
Professional liability insurance (PLS) is a policy that shields professionals such as accountants, lawyers, architects, and physicians and their businesses against potential negligence and other clients’ claims. A professional who is an expert in a specific area, or provides specific services needs to have liability insurance that covers claims from business or professional practices such as malpractice, negligence, or misrepresentation.
How Professional Liability Insurance Works in Texas
There are different names for professional liability insurance for every profession. It is called malpractice insurance for medical practitioners, and errors & omissions insurance for real estate brokers. However, this policy is not granted under homeowners’ coverage, in-home business insurance, or business owners’ policies. It only covers claims filed in the course of the policy period.
Texas professional liability insurance usually works best if claims are made during the policy duration. A typical professional liability policy will insure the policyholder from loss resulting from any claim made during the policy period. Claims can be due to covered mistakes, omissions, or negligent acts acted in the administration of the policy holder’s professional business. Incidents that happen before the coverage was activated may not be covered. Even some policies may include the retroactive date.
What’s Not Included in Professional Liability Insurance Texas
Criminal pursuit and all sorts of legal accountability under civil law are not included in the professional liability coverage, but only those shown in the policy. The same goes for cyber liability or data breach, and other technical issues are not included in core policies. Instead, the insurance coverage data security and other technology security-related issues can be purchased as separate policies.
How Much Does Professional Liability Insurance Cost in Texas?
The cost of professional liability insurance in Texas depends on several factors, including profession, industry, and the type of business. The median cost of Texas liability insurance is $59 per month.
Can I Combine Umbrella Insurance with Professional Liability Insurance for Even More Coverage?
A personal umbrella insurance policy usually doesn’t cover professional liability. In other words, bodily injuries, personal injuries, and property damages that occur while you are in the process of business activities are not considered eligible. That said, if you already have umbrella insurance, you can purchase additional professional liability insurance to cover your business assets.
Is Professional Liability Insurance Tax-Deductible?
The IRS considers business insurance a business cost, which means that your policy premiums can be deducted from your taxable income. To take advantage of this deduction, you will need to fill out some forms first.
Do I Need Texas Professional Liability Insurance?
Professionals that manage their own business need professional liability insurance even though they already have general liability insurance, business insurance, or a business owner’s policy. A general liability policy will protect them against financial losses from potential lawsuits filed against them by their clients. Professionals are expected to be experts and have in-depth knowledge or training in their respective areas of expertise.
Who Needs Professional Liability Insurance in Texas?
Professional liability insurance is recommended for all business owners in Texas. However, there are some industries that use it more than others, including:
- Health care
- Food services
- Technical services
Minimum Liability in the State of Texas
General liability coverage or State Minimum coverage covers the third party and their vehicles if an accident is your fault. You and your vehicle are not covered, but passengers in your car can receive compensation for their injuries. The coverage is enough to meet Texas’s legal requirements and is an excellent resolution if you are on a tight budget.
- $30,000 compensation for each injured person
- $60,000 compensation in total per accident
- $25,000 compensation per accident
What is Covered Under Professional Liability Insurance?
Medical Malpractice Insurance
Medical malpractice insurance is the most common type of professional liability insurance policy. Medical professionals are working under an inconsiderable threat where lawsuits can be filed at any time due to alleged malpractice. Although medical malpractice cases are considered civil torts in the United States, medical malpractice insurance can compensate for providers’ costs of such lawsuits.
Directors and Officers Insurance
Director and officers insurance is a special type of professional liability insurance. Instead of protecting risks associated with a specific industry, business services, directors and officers insurance, it provides coverage for all professionals who have particular positions within a business or organization. This policy shields high-ranking officials against risks that may compromise their roles as leaders.
Errors and Omissions Coverage
Errors and omissions insurance is a type of liability coverage designed to protect people who offer advice or professional services as their livelihood. This coverage suits any professional who gives advice:
- Lawyers who provide legal advice to their clients.
- Accountants who provide financial and tax advice
- Insurance agents who offer advice on insurance coverages and policies to their clients
- Real estate agents and brokers advise clients on real estate purchases and sales.
- Investment advisors who give clients advice on stocks, mutual funds, and other investments.
- Other job workers who provide professional services and advice related to their field of expertise.
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