Professional liability insurance protects against claims arising from your acts, errors or omissions in rendering services of a professional nature. Businesses involved in everything from advertising to engineering need to consider this coverage seriously. In fact, users of services such as those provided by lawyers and accountants often require that the insurance be in place before contracting with the professional.
Who needs Professional Liability Insurance?
Historically, professional liability insurance was designed for what are often referred to as “learned professions” such as doctors, lawyers, accountants, architects, engineers, etc. In recent years however, the scope of professional liability coverage has broadened significantly and now includes such things as business management or marketing consultants, software designers, Internet service providers, public relations providers and even insurance brokers. Virtually anyone who claims to have an expertise and is compensated for this expertise can be held liable in the event that the client feels things did not go, as they should have.
Possible Types of Claims
Of the suits that can be brought against professionals, the two most common are breach of contract and negligence
in the performance of services. Negligence suits, such as malpractice (search) arise from damages sustained due to a professional's failure to perform according to known standards of conduct in his or her field. A breach of contract suit can occur when a client alleges that the professional in some way violated the terms of the agreement or contract between the parties.
What is covered?
Professional liability insurance policies typically include coverage for defense costs, even if a suit proves to have no merit. The policy premium is usually based on the following factors: the profession involved, the number of professionals covered, annual revenues, location of the business, the limit of liability and the deductible.
The "insured" in many of these policies includes the covered organization itself and its past or present partners, directors, officers, and employees while acting within the scope of their duties.
How much do you need?
More than most forms of insurance, the amount of professional liability insurance you need is based on subjective factors, such as how likely you are to be sued and the likely severity of the claim.
If you are looking for professional liability insurance you should shop carefully for this protection, since eligibility requirements, underwriting criteria, policy language and pricing do vary among insurers.
How to find a Provider
Unlike other forms of insurance, one of the first things to do when looking for professional liability insurance is to forget about the price! Professional liability insurance protects your very way of life and means of support, so many other factors are much more important.
Most likely, your professional association endorses some provider's coverage for its members. Such endorsements are a useful starting point, as the association probably would not risk its reputation by recommending disreputable companies. It is still important to judge these providers just as rigorously as any other, though, since they almost certainly paid the association for their endorsement.
Check the rating of any company you consider. A.M. Best provides the industry-standard rating for every provider in the United States. It uses a simple A+++ to F scale.
