ASK THE EXPERT:Do you or your business have a need for
professional liability insurance?
Professional liability insurance covers liability for damages arising from the rendering of or failure to render professional services. Protect yourself and your business from claims not covered by commercial general liability coverage.
Professional liability insurance, also referred to as professional indemnity insurance, protects professional personnel against negligence claims made by their patients or clients. Professionals who commonly turn to this type of liability insurance for coverage include architects, home inspectors, lawyers, interpreters, physicians, real estate brokers and accountants—among others. Specific professional liability insurance carries different names depending on the profession. For example, professional liability insurance in the medical profession may be called medical malpractice insurance, while all other would fall under errors and omissions insurance coverage.
Professional Liability Considerations
The need for professional liability coverage developed due to typical general liability insurance policies only responding to bodily injury, property damage, personal injury or an advertising injury claim. Because professionals such as architects, lawyers, physicians, real estate brokers, technology consultants and others can cause claims without bodily injury, property damage, personal injury or an advertising injury claim, additional coverage is needed to fill this gap for these type of professions.
Common claims made on these policies include negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. For example, if a Web design platform fails to perform properly, it would not cause bodily injury, property damage or advertising injuries. Because of this, the business policy would not be triggered. But because the Web design platform not performing correctly could directly cause financial losses to a 3rd party, and may be attributed to a misrepresentation of the platform’s capabilities, the professional liability coverage would be triggered.
What Exactly Does Your Business Need?
When buying professional liability coverage, there are considerations that will help you determine exactly what you need:
• Is the insuring agreement broad enough to capture all of the current and future work of the policyholder? Determine if the policy covers the scope of your organization’s professional tasks and services by reading the definition of the covered services in the policy. Some individuals may think the liability of homeowners protects them. No! For example, an interpreter or translator provides a word or phrase that is incorrect or a mistranslated document to a 3rd party and they have a financial loss, there would be a need for Professional Liability Insurance also known as Errors/Omissions.
• What if there is a sale, merger or change in position at your organization? Tax changes in year for clients? Discuss what these possible changes in services mean for your coverage. What if there was a financial loss?
• Are there any exclusions? Look at the list of exclusions that resist coverage. Review the list to make sure it does not preclude coverage for any professional services or tasks that you need covered.
• Is an extended reporting period an option under the policy? These provisions offer extensions of time to report claims that would otherwise fall outside the policy period—as long as the act/omission resulting in the claim occurred during the policy period. What if your firm merged with a new firm or you sold the firm? Do you have tail or extended options for coverage?
• Can the policy be customized or modified? Can extensions be added? Common additional coverage includes disciplinary proceedings or reduced retentions and may be of importance to your business.
• Have there been any past tasks or activities at your business that could potentially result in a claim? Have there been past instances where a claim was filed? What was the result? Discussing the specifics of these with your agent can help determine what coverage specifications you need now, to prepare you for the future.
Other ways to protect you or your business, in addition to professional liability insurance includes the following:
• Establish a high standard for product and service quality control at your organization.
• Keep all company records up-to-date and accurate.
• Professional Liability carriers help you with all aspects of prevention, information, and Risk Management policies
To learn more how professional liability insurance can be utilized as part of your total risk management program or your profession and would like to secure an option, contact your local agent/broker or someone at CH Insurance to learn more!
As always, CH is in your corner!