Some business owners believe standard insurance policies they have obtained will protect them from claims arising during the course of doing business. However, standard business insurance policies often do not protect professionals or professional services from claims against the professionals or the businesses for negligence, inaccurate advice, misrepresentation, and other serious allegations. This is where professional liability insurance comes in. It protects against these claims in a way a standard business insurance policy does not. In some states, professional liability insurance may be required by law, by a board of bar examiners for attorneys, or by other professional societies. However, even when professional liability insurance is not required by law, it is likely a good idea for a multitude of professionals.
Who needs to have professional liability insurance?
Professional liability insurance is a must for those who provide professional services. For example, accountants, architects, doctors, lawyers, consultants, realtors, engineers, and information technology professionals are just a few of those who should acquire professional liability insurance. In today’s litigious culture, a professional liability insurance policy can make the difference between salvation and ruin. A good rule of thumb is if you can be sued for the advice you provide, you should obtain professional liability insurance.
What does professional liability insurance cover, and what is not in the policy?
Professional liability insurance usually covers any judgments against you, settlements, professional board penalties, and legal defense fees associated with claims arising from your professional services. Aside from your deductible, professional liability insurance will cover you up to the limits of your policy. Thus, the amount of money any professional services business needs will be highly dependent on the services provided and the potential for negative consequences.
There are also two types of professional liability insurance policies to consider.
One is claims-based, which requires you to have been insured both when the claimed event occurred and when the claim is filed. For example, if a negligence claim occurs today, you need to have professional liability insurance covering you today for the claim that occurred today.
Another is classified as occurrence, which covers any event that occurs during the period of insurance, even if the claim is filed after the insurance policy expires. For example, if an accident happened last year, coverage for that year would protect you even if you do not have any active insurance coverage this year.
It is important to note that coverage will not apply to acts that are deemed to be dishonest or that occur with intent to defraud. Occurrence-based insurance is particularly compelling for those who plan to retire in the foreseeable future, as it takes the burden of worry off any lingering incidents that may come back to bite a business owner.
A lifetime’s worth of work can go down the financial drain due to just one claim. Work with us today to help determine the best type of professional liability insurance for you and your business in order to protect your years of hard work