Understanding Professional Liability Insurance
Owning a business is a huge responsibility. You are responsible for your work, your actions and the good relationship with your client base. While every business owner hopes that these relationships always stay positive, the truth is that things can happen to potentially hurt the relationship with your client. People are quick to sue these days, so having an insurance policy in place to protect your business and compensate unhappy clients is a good idea for any professional.
Types of Insurance
Many industries require that their members carry a liability insurance policy. This applies to any job from a mechanic to a concrete worker. A basic liability policy covers personal, bodily or property damage caused when a professional provides work that is flawed for some reason. This type of insurance is more generalized and is not the same thing as a professional liability insurance policy.
Professional liability insurance is sometimes referred to as professional indemnity insurance. In most cases, this type of insurance is recommended for specific industries and professions. A professional liability insurance goes above and beyond general liability policies that cover physical or property damage. Instead, professional liability policies take care of what a client may see as negligence or failing to adequately complete a task or procedure. Depending on the policy, professional indemnity insurance may even provide compensation for what a client feels is the unwarranted attack on their good name. Most people call this type of damage libel or slander and some professional liability policies protect against these types of accusations as well. Even if this is covered, however, expect to see numerous exceptions and a narrow application in the policy.
What Professions Use This Insurance?
There are several professions that commonly use some type of professional liability insurance. As was previously stated, most industries that provide goods and services require a general liability insurance policy for business owners. This includes construction fields and auto repair shops. Several specific industries and professions need the added protection of a professional liability or indemnity insurance policy. The most common professions that should never operate without this type of insurance are doctors and lawyers. Professional liability insurance is also important for accountants and other financial service providers, charitable organizations, people who work in information technology, such as software or web development, consultants, home inspectors and architects.
Different professions have different names for the professional liability insurance policies that are written for their field. For example, a doctor carries what is known as medical malpractice insurance; this is a professional liability policy written specifically for the needs and common issues that apply to a medical practice. Many other industries use the title of error and omissions policy to designate the applicable professional liability insurance. Again, these are specific to each field; an error and omissions policy written for a lawyer will not adequately cover a person who writes and develops websites.
Keep in mind that some industries and states require that a proper professional liability insurance policy be in place. Other professionals may have wiggle room when it comes to legalities. However, all professionals can be legally required to reimburse clients when negligence occurs and having a suitable indemnity policy in place can save you time, money and stress if you are sued.