You went through the trouble of setting up a small business because you're passionate about what you do. You want to provide clients with a high-quality, professional service. Most of your clients will appreciate your devotion and expertise.
Unfortunately, some people who hire you may have unrealistic or unfair expectations. They may have been misled by commercials they saw or misinformation from friends or the media. Or maybe they're just super picky and are never satisfied with anything. Either way, you could do the most amazing job on the planet and clients like these still might end up unhappy with the results.
When you set up a business, it's important to make a plan for what to do if a customer demands their money back, or wants compensation for a perceived wrong. It's painful to be put in this position: no business owner wants a customer to be unhappy with the work they did. Furthermore, the complaint might harm your reputation--and any significant compensation you end up paying may mean taking a loss for your business.
Luckily, there's a way to protect your business from being harmed in situations like these: professional liability insurance.
Professional liability insurance can pay for the legal fees and whatever damages are found necessary, freeing you to continue growing your business and ensuring that the client--however unjustified their claim--is taken care of.
In other words, insurance makes it possible for you to stand behind the old adage: the customer is always right.
Even when they aren't.
Professional Liability Insurance Coverage
For most businesses, it's important to acquire at least a basic level of insurance, often known as general liability insurance. That kind of insurance covers you in the event of an accident: for example, if you break a mirror in a studio you are renting, or a chair breaks in your beauty parlor while someone's sitting on it and they get hurt. Clients might be unhappy about situations like these, but they can't really blame you as a professional: mirrors and chairs aren't your field of expertise!
When you add a professional liability insurance policy, that offers additional protection in situations that are related to your professional expertise. For example, if you're a Zumba teacher and one of your clients pushes herself a little too far in your class and throws out her back, she might claim that you should have taken it easier on her or modified the workout to suit her limitations. Or, let's say you're a hairstylist and an actor comes to you for styling before an important audition--and when he fails the audition, he claims it's because you gave him a bad hairdo.
The most common professional liability claims include:
- Negligence: The client claims you failed to address an issue that you should have addressed.
- Misrepresentation: The client claims that you misled them into thinking they would get certain results which you did not or could not provide.
- Inaccurate advice: The client claims that the professional information you gave them was not accurate, and therefore led to harm.
- Breach of contract/failure to render services: The client claims that you did not deliver the service you committed to in your contract with them.
5 Benefits of Having Professional Liability Coverage
It Creates Trust
You may think that displaying a professional liability insurance certificate in your office or studio is an admission that you might make a mistake, and might therefore convey a lack of confidence in your abilities. Actually, the opposite is true! A certificate of insurance sends a strong message to your clients that you care about them and want to make sure they are satisfied even if something goes wrong. Everyone makes mistakes, but only a true professional owns that reality and takes responsibility for it by purchasing insurance.
It Gives Peace of Mind to Your Customers
If you're a fitness or beauty professional, your clients place their health and/or their appearance in your hands. They wouldn't put themselves in such a vulnerable position unless they knew that you're a professional they can trust--and that if something goes wrong, they will get the compensation they may need. They know you're a small business owner and don't have a lot of money to throw around. Having insurance means they know that even if they need to make a large claim, you'll be able to pay.
It Gives Peace of Mind to You
What professional is going to be able to do their job properly if they have to worry about every little mistake that might harm their business? Sometimes doing a great job and moving forward professionally involves taking bigger risks, like offering more advanced classes or a more complicated beauty procedure. Having business insurance gives you the confidence to focus on developing and growing in your profession instead of worrying about what might go wrong.
It Covers You Even If You Haven't Done Anything Wrong
As mentioned above, a client might make a claim even though you haven't actually done anything wrong. It may feel completely unfair, but sometimes you'll have to put your sense of justice aside so you can both move on with your lives. Professional liability insurance helps you put the whole thing behind you.
It's an Affordable Investment with Great Value
The average cost of professional liability insurance is around $1700 per year, but most small businesses pay less than $1K. Considering the peace of mind it gives you and the benefits it has for your business, it's a worthy investment.
Other Important Tips for Avoiding Tensions with Clients
Remember, disappointed clients are the result of unmet expectations. To avoid tensions with your clients, be realistic about the results your clients can expect, and never over-promise. Be up-front and honest about your limitations. It's better to be open about your weaknesses than to misrepresent your abilities.
If a client confronts you with a complaint, don't admit liability just to ease the tension. Listen calmly, express concern and a desire to set things right, and discuss your options with them. A customer who feels that you are taking their complaint seriously and doing what you can to help is much less likely to be confrontational or make unfair demands.