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Liability Insurance FAQ For The Self Employed

April 18, 2012 | Comments: 0 | Views: 135

What is Professional Liability?

Liability is legal responsibility for damages. When we think of liability, we tend to think of the risk associated with business. Professional liability, however, applies even to individuals, particularly those that are in a service-providing or advice-providing field. Even when subcontracting, it is very possible that the liability falls on the individual, which is why insurance for the self employed is so crucial. Self employed insurance protects the individual like a business but also protects personal assets.

What is Liability Insurance?

Liability insurance is a hedge against risk. The most common form of it in the US is errors and omissions (E&O). Professional liability insurance is also called, especially in other parts of the world, professional indemnity insurance (PII) and professional liability insurance (PLI). All of these different types of policies can be extended as self employed business insurance. The primary difference is that the policy has additional features to protect the individual in ways that the standard organization does not require.

How Does Being Self Employed Affect Liability?

Many new small businesses are sole proprietorships, and a big mistake many of these new business owners make is assuming that they are not held accountable in the way an organization is. In actuality, they are held accountable in the same way and self employed liability can even be worse since it is focused on a singular entity and because claims often have access to assets that exist beyond the domain of the business. Many small business owners do not realize that their home and other assets can be at stake.

What is Public Liability Insurance?

One of the main types of standard and self employed liability insurance is PLI. The term public refers to any third party. When a company does business, there is the possibility that they affect a third party, such as the general public, vendors, subcontractors, visitors and even trespassers. If a company affects a third party, they are liable for damages, so self employed public insurance plan protects against it by transferring much of that risk to an insurance company.

What are the Other Types of Liability Insurance?

The other main types of standard and self employed insurance are product insurance and employers insurance. Product insurance coverage, which is not always compulsory, protects against damages that arise from the use of a product. Employers insurance protects against damages to an employee while on the job. Generally, worker's compensation is paid for by employers insurance. Usually, these insurance policies exist separately, and the individual must acquire unique insurance quotes for each type.

What is Umbrella Insurance?

Even when an individual has full-coverage public liability insurance for self employed workers, there can be gaps in coverage. For instance, a service-providing small business might not foresee the need for product insurance, but there are cases where damages from a service could fall under that domain. Umbrella insurance, sometimes called drop-down insurance, exists to fill these gaps. If a liability occurs that the individual is not covered for, the umbrella policy drops down and fills in those gaps in coverage.

Self employed liability insurance can cover you against negligence. Get yourself a certificate of self employed liability insurance and protect your business assets against claims filed against you.

Source: EzineArticles
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