13 Essential Insurance Coverages for Managing Risks in Professional Service Firms

As a professional services company, navigating the complex landscape of risk management is crucial for long-term success. In an increasingly digital and litigious world, businesses face a multitude of threats that can jeopardize their financial stability and reputation. At Burbank Insurance Services, we understand these challenges and are committed to helping you identify and mitigate the 13 most critical risks facing your industry.

1. Safeguarding Against Cyber Threats

In the digital age, cyber risks pose a significant threat to professional service firms. A single data breach or cyber attack can have devastating consequences, leading to financial losses, reputational damage, and legal liabilities. According to the Ponemon Institute, the average cost of a data breach in the United States reached $8.64 million in 20201. To protect your business, consider investing in robust Cyber Liability insurance, which can cover the costs associated with data breaches, including forensic investigations, legal fees, and crisis management expenses.

2. Protecting Your Workforce

Workplace accidents and injuries can occur in any industry, and professional service firms are no exception. Slips, trips, and falls, as well as ergonomic injuries resulting from prolonged desk work, can lead to significant medical expenses and lost productivity. In 2019, the U.S. Bureau of Labor Statistics reported 2.8 million nonfatal workplace injuries and illnesses in the private sector2. Comprehensive Workers’ Compensation insurance is essential for covering medical costs, rehabilitation expenses, and lost wages, while also providing resources to help injured employees return to work safely and efficiently.

3. Mitigating Employment-Related Risks

As the workforce becomes increasingly diverse and aware of their rights, professional service firms face a growing risk of employment-related claims. Allegations of discrimination, harassment, wrongful termination, and other employment practices violations can result in costly legal battles and damage to your company’s reputation. The Equal Employment Opportunity Commission (EEOC) reported receiving 67,448 charges of workplace discrimination in fiscal year 20203. Employment Practices Liability insurance is crucial for protecting your business against the financial consequences of such claims, covering legal defense costs and settlements.

4. Ensuring Business Continuity

Equipment breakdowns, whether involving computers, HVAC systems, or other essential machinery, can grind your operations to a halt. The resulting downtime can lead to lost revenue, increased expenses, and dissatisfied clients. Equipment Breakdown insurance helps cover the costs of repairing or replacing damaged equipment, as well as the income lost during the downtime. By investing in this coverage, you can minimize the financial impact of unexpected equipment failures and resume normal operations as quickly as possible.

5. Managing Professional Liability Exposures

In the course of providing professional services, there is always a risk of making errors or omissions that can harm your clients. Even the most diligent and experienced professionals can make mistakes, and the resulting claims can be financially devastating. According to Aon’s 2020 Professional Liability Insurance Market Overview, the average cost of a professional liability claim in the United States was $340,0004. Professional Liability insurance, also known as Errors & Omissions (E&O) coverage, is essential for protecting your business against claims of negligence, misrepresentation, or failure to deliver services as promised.

6. Addressing Evolving Workforce Dynamics

As the nature of work continues to evolve, professional service firms must adapt their risk management strategies accordingly. Remote work, for example, has become increasingly common, presenting new challenges in terms of employee safety, data security, and productivity. By leveraging innovative risk management solutions, such as Burbank Insurance Services’ comprehensive risk assessment tools and employee training programs, you can foster a culture of safety and well-being, regardless of where your team members are located.

7. Navigating International Exposures

For professional service firms with global operations, managing risk becomes even more complex. Differences in legal systems, cultural norms, and business practices can create unique exposures that may not be adequately covered by domestic insurance policies. When expanding your business internationally, it’s essential to work with an experienced insurance partner who can help you assess your global risks and develop a customized insurance program that provides seamless coverage across borders.

8. Protecting Against Catastrophic Losses

While most businesses are prepared to handle routine claims, the possibility of a catastrophic loss can keep any business owner up at night. Whether it’s a multi-million dollar lawsuit or a devastating natural disaster, the financial impact of a major loss can be crippling. Umbrella and Excess Liability insurance provides an additional layer of protection, kicking in when the limits of your primary policies have been exhausted. This coverage can be the difference between weathering a crisis and facing financial ruin.

9. Insuring Valuable Mobile Equipment

For professional service firms that rely on specialized, portable equipment, such as surveying tools or medical devices, protecting these assets is paramount. Theft, damage, or loss of this equipment can lead to significant replacement costs and project delays. Inland Marine insurance is designed to cover property that is frequently moved from one location to another, ensuring that your valuable equipment is protected wherever your work takes you.

10. Managing Third-Party Risks

In today’s interconnected business world, professional service firms often rely on a network of subcontractors and vendors to deliver their services. While these partnerships can be beneficial, they also introduce new risks. If a subcontractor makes a mistake or causes an injury, your business could be held liable. To mitigate these risks, it’s essential to implement a comprehensive risk transfer strategy, requiring subcontractors to carry their own insurance and carefully reviewing contracts to ensure that liability is allocated appropriately.

11. Covering Company Vehicles

If your professional service firm owns or leases vehicles, Commercial Auto insurance is a must. Accidents involving company vehicles can result in costly property damage, bodily injury claims, and legal expenses. According to the National Safety Council, the average cost of a vehicle-related injury claim in 2019 was $78,8005. By securing adequate Commercial Auto coverage, you can protect your business from the financial consequences of accidents, while also ensuring that your employees and any third parties involved are properly cared for.

12. Safeguarding Visitors and Clients

Whenever clients or other visitors enter your premises, there is a risk of injury. Slip and fall accidents, for example, are among the most common types of premises liability claims. The National Floor Safety Institute reports that falls account for over 8 million emergency room visits annually6. General Liability insurance is essential for protecting your business against bodily injury and property damage claims arising from incidents on your property, covering legal defense costs and any settlements or judgments.

13. Building Resilience Against Natural Disasters

No matter where your professional service firm is located, the threat of natural disasters looms large. Hurricanes, wildfires, earthquakes, and other severe weather events can cause extensive damage to your property, equipment, and data, disrupting your operations and putting your financial stability at risk. Commercial Property insurance is the foundation of a strong disaster preparedness plan, providing coverage for physical damage to your buildings and contents. Business Interruption insurance is equally important, helping to replace lost income and cover ongoing expenses while you work to rebuild after a disaster.

At Burbank Insurance Services, we understand that every professional service firm faces unique risks and challenges. Our experienced team is committed to helping you navigate the complex world of risk management, crafting customized insurance solutions that protect your business, your employees, and your clients. With our comprehensive approach and deep industry expertise, you can have confidence knowing that your firm is prepared for whatever the future may hold. Contact us today to learn more about how we can help you build a resilient, thriving business.

1 IBM. (2020). Cost of a Data Breach Report 2020. https://www.ibm.com/security/digital-assets/cost-data-breach-report/#/

2 U.S. Bureau of Labor Statistics. (2020, November 4). Employer-Reported Workplace Injuries and Illnesses – 2019. https://www.bls.gov/news.release/archives/osh_11042020.pdf

3 U.S. Equal Employment Opportunity Commission. (2021, February 26). EEOC Releases Fiscal Year 2020 Enforcement and Litigation Data. https://www.eeoc.gov/newsroom/eeoc-releases-fiscal-year-2020-enforcement-and-litigation-data

4 Aon. (2020). Professional Liability Insurance Market Overview. https://www.aon.com/getmedia/c8905c42-04b9-412f-b3c0-35e28e16a56c/2020-Professional-Liability-Market-Overview.aspx

5 National Safety Council. (2020). Work Injury Costs. https://injuryfacts.nsc.org/work/costs/work-injury-costs/

6 National Floor Safety Institute. (n.d.). Quick Facts. https://nfsi.org/nfsi-research/quick-facts/

6b Travelers Insurance.

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