If you provide a service, chances are you need professional liability insurance. Also known as errors and omissions insurance, this coverage protects your company and your bottom line from customer claims of late, incomplete, or unsatisfactory work.
All businesses face risks. If you work directly with clients, those clients could also cost you.
You worked for years to perfect your trade. You have obtained advanced education and adhered to a high standard of care in your field.
But you are also human. Mistakes can and will happen and could lead to expensive losses. And even if your professional conduct is flawless, an unhappy client or patient could still blame you for an unfavorable outcome.
It is hard to imagine, but a single allegation could leave your finances and reputation crippled. Should you be sued, you could face costs for legal fees even if the allegation against you proves groundless.
You will need help — specifically, insurance coverage designed to cover claims alleging professional negligence. What you need is professional liability insurance. This is because such claims often are not covered by your commercial general liability policy, which is designed for claims alleging bodily injury, such as slips and falls on your premises.
What does professional liability insurance cover?
- Inaccurate advice
Even if you did nothing wrong, a client could still sue you if they believe you've made a mistake.
Here are 10 businesses that absolutely need professional liability insurance — and why.
- Physicians. It is not difficult to imagine the adverse result that an error in treatment could have on a patient’s livelihood or life. Along with any quantifiable resulting costs like medical bills or lost income, a patient’s attorney can seek money for pain, suffering, and inconvenience (in addition to legal fees). Professional liability insurance for medical professionals is typically called medical malpractice insurance and can help with these expenses.
- Allied Healthcare Providers. Doctors are not the only professionals exposed to malpractice allegations. Counselors, physical therapists, pharmacists, personal trainers, in-home healthcare workers and others who provide health services as a profession should protect themselves and their companies with professional liability insurance.
- Veterinarians. Some people depend on a pet (such as a service dog). Others rely on an animal’s health for financial reasons (like farmers or breeders). Harm to the animal due to a veterinarian’s negligence or error could result in a lawsuit alleging factors like emotional stress or financial hardship.
- Legal Professionals. Attorneys are entrusted with not only issues concerning litigation but also personal wealth, business dealings, and proprietary information. Negligence, breach of privacy, and poor counsel are just a few of the reasons clients pursue claims for financial loss, reputational harm, or other damaging results.
- Architects/Design Professionals. Buildings and other structures may be designed with flaws that become clear well after the contractor has completed the job. Should damage result from a design error, the professional who supplied those specs to the contractor may be sued by the building owner and/or builder for resulting damages, financial harm, and loss of use.
- IT Professionals. Imagine you are hired to enhance the security of a client’s office network, then learning that a vulnerability created by your work caused that network to be exploited or damaged. Professional liability is needed to cover the client’s resulting damage, financial loss, and loss of use.
- General Contractors. As more GC’s evolve into design services, the exposures presented previously for architects/design professionals now exist for the GC.
- Real Estate Professionals. Buying and selling property is complicated, presenting piles of confusing paperwork that create hundreds of opportunities for errors. Real estate professionals can be sued for causing financial harm to either party in a transaction.
- Financial Professionals. Whether it is tax preparation, retirement planning, or wealth management, financial professionals have an awesome responsibility to clients. An error in filing taxes or the negligent handling of a financial portfolio could result in a lawsuit alleging significant monetary damages.
- Insurance Professionals. When a terrible event happens in a person’s life, such as a fire, auto accident, serious illness, or death of a loved one, people rely on the products sold to them by insurance professionals to minimize that event’s financial impact. Errors and omissions insurance can protect these professionals should their mistake result in faulty coverage or loss of protection for the client.
Closing the gap
There is no standard professional liability insurance policy. Consider these questions when reviewing policies:
- Are legal defense costs paid out of or in addition to the limit of insurance?
- Will claims that arise from acts that occurred prior to the policy’s effective date be covered?
- Does the policy cover the actions of all individuals acting on behalf of the business?
- What does the policy exclude?
Just because your line of work is not on this list does not mean you are in the clear! Reach out to us today to see if you can receive help from a professional liability policy.