Professional Liability Insurance: Description Of Professional Liability Insurance

As a professional, you can be sued for any number of business-related errors, even when the allegations against you are a work of fiction. True or not, win or lose, a lawsuit is expensive and professional liability insurance will cover your costs.

A number of states have made it law that businesses carry professional liability insurance. If you are in business, confirm with your state whether or not you are required to carry coverage. For most businesses, professional liability insurance is highly recommended.

Professional liability insurance is for individuals and professionals that provide a service or advice to clients. Medical professionals have similar coverage called malpractice insurance. If your actions or inactions result in a financial loss for your client, you can be sued for negligence. In the medical field, if you make an error in a diagnosis or treatment that results in your client getting very sick or even dying, you can find yourself facing a very expensive lawsuit.

Your professional liability insurance will financially protect you from claims that are not covered by your commercial general liability policy, these include:

  • Errors and omissions by you, your employees and your subcontractors.
  • Failure to complete your contractual obligations.
  • Any mistake made anywhere in the world.

Professional liability insurance is a claims-made policy for the most part. This mean you will be covered for incidences that occur only during the period in which your policy is in effect. If your insurance does not begin until years after you began your business, you run the risk of being sued now for past mistakes and you will be without insurance coverage. You do have options, including:

Professional Liability Insurance: Description Of Professional Liability Insurance
  • A prior acts date to cover you starting from a predetermined date in the past.
  • Tail coverage that will lengthen your coverage past the end date of a policy.

One of the most important functions of professional liability insurance is financially enabling you to defend your business and repair your reputation before you lose all of your clients. Business is based on reputation and a nasty lawsuit can professionally ruin you in one fell swoop.

Most policies sell coverage starting at $1,000,000 with deductibles starting at $1,000. Your premiums and coverage are based on your business profile, including profits, what industry you are in, and the kind of risks you take. If you are in business, make sure you are financially protected with professional liability insurance.

Professional Liability Insurance: What Does Professional Liability Insurance Cover?

Professional liability insurance coverage is a must if you are in the business of offering counsel or advice to clients. Things can go wrong for your clients and they may decide you are to blame. A lawsuit can be very expensive and professional liability insurance will financially cover you for the mistakes you may make.

There are a number of things that can happen that will keep you from fulfilling promises to your clients and being accused of unintentional negligence, including:

  • Lost client information or contract.
  • Computer system crashes and lost databases.
  • Making promises you cannot keep, or misleading your client.
  • Poorly completed contracts.
  • Profit and contract losses.
  • You are not covered for intentional actions or for any criminal activity of any sort.

Professionals can be accused of copyright or intellectual property infringement. Professionals in the information technology (IT) industry, such as software developers, take the highest risks for such allegations. Professional liability insurance for the IT industry is still in its development stages and some coverage that was not available last year may be available now. If you work in the IT field, revisit your policy with your insurance agent on a regular basis.

A client can claim you are liable for slander, invasion of privacy or breach of confidentiality.

Professional Liability Insurance: What Does Professional Liability Insurance Cover?
  • If someone believes you are trying to ruin their reputation, they can sue you for slander.
  • As a media professional, if you are researching a public figure, they may sue you for invasion of privacy.
  • If you are in a position to know confidential information about a person or a business and this information finds its way to other people, you may be blamed and sued for a confidentiality breach.

If a client decides you are negligent and then decides to sue you, your professional liability insurance will cover incurred costs, such as:

  • Lawyer’s fees, court costs, a judgment or settlement and other related expenses.
  • Lost income due to time away to attend your deposition and trial.

As a professional, you have more information and knowledge about your specialty than most people do and as a result, you and your clients can misunderstand each other. Problems can go undetected, and work can be done improperly. Professional liability insurance can financially protect you when honest mistakes happen.

You can be sued for something that happened last week or ten years ago. Make sure you have professional liability insurance throughout your professional career and even into retirement.

Professional Liability Insurance: Who Needs Professional Liability Insurance?

After years of education and dedication to your profession, yes, someone will probably sue you for negligence. Professional libel lawsuits can be extremely expensive and can be covered by professional liability insurance. As a professional, you should be insured. It is so important that some states and even some industries require you to purchase a professional liability insurance policy before you hang out your shingle.

The medical field is an industry that is in a very high risk category for professional liability lawsuits. Known as malpractice insurance, you should be protected if you are a:

  • Doctor, nurse or therapist.
  • Social worker, counselor, psychologist or psychiatrist.
  • Dentist, optometrist or chiropractor.
  • Medical students in a hands-on learning institution.

Teachers, schools and students in any industry should protect themselves with professional liability insurance.

Construction professionals deal with a million details and complex building codes. Professional liability insurance protects engineers, architects, designers, land surveyors and site managers.

Consultants can be accused of giving bad advice that may have resulted in a client losing money or business. Consultancy work is very common and can be found in almost every industry, including:

  • Real estate and insurance.
  • Accounting and business management.
  • Art, agriculture, computer, construction, diet, education, employment, entertainment, government, health, horticultural, hotel, interior decorating and design, investment, management, manufacturing, marketing, mediator, publishing, quality control, research and development, taxes and transportation.

If you work for a multi-billion dollar corporation and make million dollar deals, you need professional liability insurance. If you are a software developer with a home-based business, you are also susceptible to liability claims. People in both professions can be sued for millions of dollars and can suffer from a ruined reputation and lost business. No matter what your profession, make sure you are financially able to defend yourself against claims of negligence.

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