Have you ever dealt with a client who seemed friendly enough at first but then turned on you at the last minute? Maybe they claimed you cut corners or made a mistake. Or perhaps your work only caused more trouble for them.
In most cases, your company is never to blame. Some clients are only out to make money through claims of negligence. Others may be lashing out due to something that went wrong outside your control.
Professional liability insurance exists to protect you from these claims and avoid lawsuits. Here’s everything you need to know about how professional liability insurance works.
What Is Professional Liability Insurance?
Professional liability insurance exists to protect businesses and professionals. It’s not uncommon for accidents to occur. These accidents happening on the job only complicate matters.
Sometimes these accidents cause bodily injury or property damage. When that happens, liability insurance can cover any costs related to these events.
One of the best examples of a job requiring liability insurance is a medical doctor.
A doctor sees and treats countless people with the goal of helping them. Something they prescribe or suggest treatment that may result in the condition worsening. That could make them liable for any further suffering caused by their actions.
Insurance for professionals also protects you in cases of accused negligence. You may be legally held responsible for someone else’s injury or damage to their property. Your insurance helps cover their medical and legal fees.
You should also recognize the difference between professional liability and general liability. Professional policies are written on a “claims-made” basis. General policies are written based on the date of the occurrence.
How Professional Liability Insurance Works
There are four main parts of any claim for negligence that you should know.
First, you must have a legal responsibility to the plaintiff. Second, the defendant must be proven to have breached that legal trust or otherwise put the plaintiff at some kind of risk.
Third, the plaintiff must have suffered some kind of injury. Fourth, the cause of the injury was directly related to the defendant’s actions. These actions must be in relation to their work.
In other words, a random person cannot claim that your business has caused them harm. There needs to be a pre-existing or current relationship. Your business is responsible for certain things that may happen to clients under your care.
Liability insurance comes into play if your business or company is guilty of negligence. They cover the cost related to how your work has caused damage to the accusing party. What is covered depends on the profession, though.
For example, architect professional liability works for architecture-related negligence. Engineering professional liability would protect individuals against alleged errors in their work. Medical malpractice insurance would cover costs related to their medical work.
What Isn’t Covered
What your professional liability insurance does and doesn’t cover depends on your industry. It also depends on who is providing the coverage.
Some insurance providers design policies for medical providers and healthcare workers. In those cases, they cover accusations related to medical decisions. They would not be liable for anything discussed outside of that realm.
Your liability insurance may not cover accidental damages incurred on your property. In that case, you would need to get something like general liability insurance. There are also other insurances available for management liability, product liability, and more.
Coverage for all types of professional liability insurance does not include criminal prosecution. Cyber liability is also often not included in your basic policies.
Who Liability Insurance Benefits
Liability insurance is required whenever you take on responsibility for a client. You may advise them, handle jobs for them, or perform other duties.
Some careers that require professional liability insurance include contractors, attorneys, and doctors. Even insurance agents, teachers, and therapists require professional coverage.
Consultants who operate as sole proprietors take on responsibility for any damages. The information you gather for a report or project may include incorrect figures. Giving the wrong information could cause severe problems for another business.
Missed deadlines are another form of negligence on your part. Even if your work was delayed by something completely out of your control, they may still find you liable for any damages they incurred.
Professional liability insurance covers attorney fees and defense costs. Often, clients will require proof of your coverage, so they know you’ll be held responsible if your advice backfires on them.
Types of Professional Liability
No one insurance can cover every industry’s professional risk and liability. When searching for professional liability insurance, you must ensure you acquire the correct kind. Most insurance and risk specialists can help connect you with the right options.
For example, medical malpractice insurance exists for the medical field. Claims in this realm can reach large sums. The coverage must be substantial enough to match those needs.
A lawyer would acquire errors and omissions coverage. This type of liability insurance won’t cover anywhere near the same kind of events as a doctor. It protects a lawyer who was found to have given harmful advice or not performed to the best of their abilities.
Finding the Best Professional Liability Insurance Provider
Finding the right professional liability insurance for your field can be difficult. This is especially true for more common fields like architecture and engineering.
Your best option will be to reach out to an insurance agent or vendor. Their job is to list out what providers match your career.
Risk Specialty Group is a risk management and professional insurance company. We help design professionals get lower costs on the policies they need. Get a free quote online today and contact us if you have any questions.