Posted on May 17, 2014
Professional liability insurance protects providers of professional services from claims or lawsuits alleging negligence, mistakes, faulty service or failure to provide service. Also known as errors and omissions coverage, this insurance is needed by individuals and companies that provide professional services, give advice to clients or need professional liability as part of a contract.
When nurses, doctors, lawyers, psychologists purchase professional liability insurance, it is termed malpractice coverage. Most medical professionals need the extra protection of liability insurance should they be accused of negligence or liability from their service. When professionals that have fiduciary responsibilities to clients such as corporate officers, accountants, insurance agents and real estate brokers purchase professional liability, it is usually called errors & omissions. This coverage protects them from mistakes or miscalculations that could lead to financial losses for clients that potentially could result in a claim.
The main purpose of professional liability coverage is to protect businesses from lawsuits that could potentially spell financial ruin and possibly end a professional's career. It helps cover legal expenses associated with defending from lawsuits that in some cases are unfounded or frivolous. When a professional is found legally liable and financially responsible, this liability coverage will also pay for any medical expenses or monetary damages awarded by the courts.
In the same way that general liability insurance pays claims, so too does professional liability insurance. Policies are either occurrence or claims made based meaning that occurrence policies will cover any incident that occurs during the policy period and cover it even if claim is reported after the policy's expiration date. Claims made policies only cover claims made while the policy is in effect.
Accidents and mistakes happen, but sometimes professionals may be accused of financial, mental or physical harm when they haven't actually caused the alleged harm. In some cases, claimants file against professionals for failure to act or lack of care. Whatever possible error or oversight that might happen during the course of working with the general public, professionals need professional liability insurance more than ever before. The result of lawsuits can lead to losing state licensing and an entire career so the most important action to take is to prepare and protect with professional liability coverage today.