Professional Liability Insurance
Many of you may have heard about insurance malpractices that go on in the medical field. However, the term professional liability insurance is not common among patients. Let’s look at its definition:
It helps in protecting against all omissions and errors while the professionals provide equivalent services to the users.
The definition mentioned above isn’t the only meaning of professional liability insurance. This definition aspect varies based on the insured professional. It typically helps you safeguard against negligence and mistakes that can even cause you financial loss.
It helps you in covering the legal defense cost, helping you in overcoming appropriate damages. The aspects that it covers depend on the professional liability insurance itself. It has three types that are commonly used against usual errors in the professional world.
- Directors and officers liability insurance
- Errors and omissions liability insurance
- Malpractice insurance
Now let’s look at these three types independently so that you can understand before you can step into this world of insurance and lawsuits.
Professional Liability Insurance
Do you need professional liability insurance?
If you perform a professional service, you're vulnerable to lawsuits from clients who are unhappy with your work. Professional liability helps you pay the legal bills. Be ready to handle claims that you:
Caused a client physical harm. A beautician's client could have an allergic reaction toa hair dye.
Caused a client to lose money. A financial planner's client could buy a failing stock.
Caused a client indirect harm. A web host's client could have an online shop that goes down during a storm.
Every profession is different - get a personalized recommendation on that best policy for you.
Fast Facts About Professional Liability Insurance
Businesses that offer a professional service or give advice to clients need professional liability insurance (also known as errors and omissions insurance). It’s the only business insurance that protects against dissatisfied clients who file a lawsuit over a mistake, missed deadline, or another complaint related to the quality of your work.
The circumstances that lead to potential professional liability claims are common in some industries:
If a client has unmet expectations based on a miscommunication or an error in a contract, email, or order form, they may sue.
If you give erroneous instructions or advice that causes financial losses a client may blame you and sue for damages.
If your work is late, incomplete, or fails to meet industry standards, your business could face a lawsuit.
Yes. Even if your business wasn’t at fault, a client who believes you caused their financial loss might sue you. Professional liability insurance covers your legal expenses even if the lawsuit never makes it to court.
It depends. Your professional liability insurance policy will cover liabilities specific to your business. Your provider will consider your industry, your claims history, and your services to determine an insurance premium. The options you choose – such as deductibles, policy limits, and types of coverage – will also affect your rates.
To make a professional liability claim, simply call your insurance provider. Your agent will ask you to provide a description of the incident and basic information such as your name, the business name, and your policy number. Your insurance agent can guide you through the process and provide answers to any additional questions.