Do you provide professional advice? If so, then it is important that you understand what professional liability insurance (aka Malpractice Insurance or E&O Insurance) is and why it’s necessary. Professional liability insurance will cover the costs of defending yourself in a lawsuit by providing professional services. It protects your business against costly litigation if someone sues you for providing professional advice which goes wrong. In this blog post, we’ll go over what liability insurance is and why every business providing professional services should purchase some!
What is Professional Liability Insurance?
Professional liability insurance is different from commercial general liability (CGL). It provides protection for business entities that provide professional advice and go wrong. For example, a CPA who audits the books of another company may be sued if they find errors in their financial statements. Or an attorney could get sued by arguing on behalf of one party to a lawsuit without revealing he had been hired by the other side of the case to help represent them instead. That’s why it can’t hurt your bottom line to have some malpractice coverage – you never know when something might happen!
For a policyholder not to owe money towards defense costs, there must be no gross negligence involved with providing professional services which went wrong so the policyholder is not at fault.
What is the cost of Professional Liability Insurance?
Professional liability insurance can be expensive, but it’s worth the cost for peace of mind (and your business’ bottom line!).
When you purchase malpractice insurance as a solo practitioner, there should be no deductible involved which will cover defense costs that go over what was offered by other carriers in terms of coverage. When purchasing a E&O policy with another company or multiple companies, deductibles may apply and if they don’t have any Professional Liability Insurance then individual policies must provide protection against all claims including those from third parties who weren’t directly involved in providing professional services related to their profession.
Professional liability extends beyond just professionals like doctors and lawyers. This is because when professionals are hired to perform services, there is a responsibility to act in the best interest of their clients. If they don’t and something goes wrong, then they can be responsible for any damages that result from this negligence.
Does Professional Liability Cover Lawsuits?
The professional liability insurance protects against lawsuits filed by third parties who are not directly involved in providing professional service related to your profession when you acted with gross negligence or willful misconduct that caused injury or damage due to negligent advice.”
What about Gross Negligence?
Gross negligence is an act that falls far below the standard of any reasonable person. Gross misconduct can be defined as a behavior with intention to cause injury or damage. These are not limited to professional advice but extend to your profession when you acted with gross negligence or willful misconduct that caused injury or damage due to negligent advice.”
A business can be sued if they provide professional advice and goes wrong. This could happen if their professional duty were neglected for them to make more money, such as providing high priced services without communicating this cost beforehand, recommending costly products instead of affordable ones, etcetera.
If you want to discuss your options for E&O Insurance, please call us at 561-732-9305 our quoting hours are Monday through Friday from 8:30 AM to 5:00 PM. In addition, you can request a quote online. Please remember, We Handle All the Work, While You Save!
Rob Macoviak is the President of Oyer, Macoviak and Associates. Oyer, Macoviak and Associates is the oldest independent insurance agency in Boynton Beach and has been in business since 1953.