What is 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 called ‘professional indemnity insurance’, protects personnel against negligence claims made by their patients or clients. Professionals commonly turn to this type of liability insurance for coverage include architects, home inspectors, lawyers, physicians, real estate brokers and accountants. Specific professional liability insurance carries different names depending on the profession. For example, professional liability insurance in the medical profession is also known as ‘medical malpractice insurance’, while real estate brokers fall under ‘errors and omissions insurance’. Because claims become more frequent in a struggling economy, protect yourself with professional liability insurance.
Professional Liability Considerations
The need for professional liability coverage came from the average general liability insurance policies only responding to bodily injury, property damage, personal injury or an advertising injury claim. Meaning there was a coverage gap. Because professionals such as architects, lawyers, physicians, real estate brokers, technology consultants and others can be liable for other ‘damages’ besides bodily injury, property damage, personal injury, or an advertising injury claim, additional coverage is needed to fill this gap.
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 correctly, it will not cause bodily injury, property damage or advertising injuries. Because of this, the general liability policy would not respond. But because the Web design platform not performing correctly could directly cause financial losses and may result in a misrepresentation of the platform’s capabilities, the professional liability coverage would be triggered.
What Exactly Does Your Business Need?
Some of the below considerations will help you determine what you need when buying professional liability coverage:
Is the insuring agreement broad enough to capture all of the current and future work of the policyholder?
Determine whether the policy covers the scope of your organization’s professional tasks and services by reading the definition of the covered services in the policy. For example, in a medical professional’s professional liability coverage, the operative definition would be “medical services” or a comparable phrase. Harvard Western Insurance can help you determine if your policy would cover all professional tasks under the operative definition or if you need to add additional clauses.
What if there is a sale, merger or change in position at your organization?
Many changes are going on during this down economy. Discuss what these possible changes in services mean for your coverage. Is there approval needed to continue coverage?
Are there any exclusions?
Look at the list of exclusions that resist coverage. Please review the list to make sure it does not preclude coverage for any professional services or tasks that you need to be 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 or omission resulting in the claim occurred during the policy period. Find out what extended reporting period options are available and discuss how much time the policyholder may need to report a claim.
Can the policy be customized or modified?
Can extensions be added? Standard additional coverage includes disciplinary proceedings or reduced retentions, which may be necessary for your business.
Have any past tasks or activities at your business that could potentially result in a claim?
Have there been past instances where your organization filed a claim? What was the result? Discussing these specifics with Harvard Western Insurance can help determine what coverage you need now to prepare you for the future.
Other Ways to Protect Your Business, in Addition to Professional Liability Insurance:
- Establish a high standard for product and service quality control at your organization.
- Keep all company records up to date and accurate.
- Train employees thoroughly and properly.
- Ask Harvard Western Insurance for safety and compliance information.
Contact Harvard Western Insurance today to learn how professional liability insurance can be part of your total risk management program.
Insights are not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.