Business Valuers: Why Purchase Professional Liability Insurance?

Denise GillinBusiness Insurance

By Jeffrey S. Gelburd, CPCU, ARM, Vice President, for American Society of Appraisers

Over the years we have been asked by Business Valuers about the necessity of purchasing Professional Liability (or E&O) insurance for themselves or their business.

The following reasons are the most prevalent in the purchasing decision.

  • The Insurance Policy Will Pay Defense Costs: This is the # 1 reason for purchasing E & O insurance – the policy is written to cover attorney defense fees which can easily run into the tens of thousands of dollars.
  • The Cost of Insurance is Relatively Inexpensive:  Minimum premiums for a policy offering a $1,000,000 limit can start at just $2,000.
  • Low Deductibles: Deductibles for these policies typically start at $1,000 and can go as high as $10,000. The size deductible an insurance underwriter will offer is mostly based on the annual revenues of the firm or Business Valuer.
  • The Insurance is Requested From Clients and Attracts New Clients: A considerable number of Business Valuers are being asked in these litigious times to carry Professional Liability Insurance. It is often times requested by the customer or client prior to an engagement.
  • Protecting a Firm’s Assets From Losses: Another valid reason to purchase E & O insurance is to protect a firm’s assets from a settlement or litigation costs stemming from a claim or lawsuit. The smaller the firm, the more reason to purchase coverage.

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