What Limit of Liability Should You Choose?

As you begin shopping for Professional Liability insurance, choosing an appropriate limit of liability is a major consideration. Here are some of the factors you should take into account.

Budget and Resources

The limit of liability that you choose should correspond to the size and scope of your professional endeavors, as well as the dollar amount you believe would cover a claim that could be made against you. You should include the expense of defense costs and settlements in your decision. Limits for a Lockton Affinity Professional Liability policy range from $500,000/$500,000 (limit per claim/annual aggregate limit) to $2,000,000/$4,000,000.

The limit per claim is the maximum dollar amount for damages and expenses that arise from a claim. The annual aggregate limit is the maximum total dollar amount that your policy will pay in your defense, per year.

Career Stage

If you are new to your profession with a relatively small number of clients, a lower limit may be appropriate. As your career grows and changes—for example, your level of education, certification or training expands, or you modify the services you offer—you should reevaluate the limits of liability you carry. With claims-made coverage you have the opportunity to increase your coverage limits each policy year. Whichever limit you select at the start of each coverage period will apply to any covered claim that may be reported during the coverage period, regardless of the date of the incident.

Industry Comparison

It can be helpful to ask other people in your profession what limits of liability they carry. In general, it is advisable in the event of a claim to make sure that your limit of liability is in line with other professionals in your industry.

Legal Considerations

In certain cases, your state may require a minimal limit of liability in conjunction with your licensing. Certain kinds of corporations and partnerships may also require you to carry a specific minimum limit of liability, depending on the statutes of your state.

Resting Easy

The final test of whether your limit of liability is appropriate for you is whether you feel confident that you have enough coverage to keep you from worrying about it. If your coverage can ease those nagging doubts and allow you to concentrate on growing your client base and serving your clients, you’ve made the right choice.