Insurance Tip – What To Look For In A Professional Liability Insurance Policy
A professional liability insurance policy is triggered when a firm or person fails to properly perform his or her professional duties. Because professionals are expected to have experienced technical knowledge or training in their particular area of expertise, they are also expected to perform the services for which they were hired according to standards of conduct already established for their profession. If a professional services individual or firm either chooses to or is unable to use the skill level a client should be able to reasonably expect of them, they can be held legally responsible for harm caused to another person or business.
A firm should consider purchasing a professional liability insurance policy if any of the following applies to its business activities:
- The firm provides a professional service or represents their services as such;
- The firm supplies advice to clients on a recurring basis
- The firm is requested by a client to have professional liability insurance as a requirement to signing a contract
Professions commonly purchasing a professional liability insurance policy include accounting, insurance, consulting, commercial photography, advertising, engineering, real estate, financial services, legal services, architects and medical services. Professional liability insurance can assume different names depending on the particular profession. For example, professional liability insurance is called malpractice insurance in reference to medical services. When used in reference to coverage for lawyers, accountants or consultants, it is referred to as errors and omissions (E&O) insurance.
Also see: How to choose the best general liability insurance for small business
It is important to realize a professional liability insurance policy is intended to provide coverage for allegations of financial damage from a third party. It will not cover the same claims as a general liability policy. For example, it won’t cover damages or claims expenses if a representative of the firm causes personal or bodily injury or property damage to another individual or firm.
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Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from a KMRD risk professional before taking any action.
