Protecting Your Business from Professional Mishaps: Understanding What’s Covered
As a professional in your industry, you’ve worked hard to build a reputation for delivering high-quality services. But even with the best intentions, mistakes can happen. Whether you’re a doctor, lawyer, accountant, or consultant, you’re exposed to a unique set of risks that can put your business and professionalism on the line. That’s where professional liability insurance comes in โ to provide a financial safety net and protect your business from costly lawsuits.
Professional liability insurance, also known as errors and omissions (E&O) insurance, is designed to cover damages that may arise from your professional services or advice. But what exactly does it cover? In this article, we’ll delve into the world of professional liability insurance and explore the types of claims and situations that are typically covered.
Negligence: The Most Common Claim
Negligence claims are the most common type of professional liability claim. Negligence occurs when you fail to provide a level of care that a reasonable professional in your industry would have provided in a similar situation. For example, if a surgeon leaves a surgical instrument inside a patient during an operation, that’s considered negligence.
Professional liability insurance will typically cover damages for negligence claims, including:
- Pain and suffering
- Medical expenses
- Lost wages
- Business interruption
Libel, Slander, and Defamation
As a professional, you may be at risk of making statements that could be construed as libelous, slanderous, or defamatory. This can happen through social media posts, written reviews, or even public comments.
Professional liability insurance may cover claims for libel, slander, and defamation, including:
- Damages to reputation
- Loss of business
- Court costs
Breach of Contract
Breach of contract claims arise when you fail to fulfill the terms of a contract. This can happen when you’re working on a project and you miss deadlines, fail to deliver promised results, or don’t meet the specified standards.
Professional liability insurance may cover damages for breach of contract claims, including:
- Liquidated damages
- Court costs
- Attorney fees
Failure to Provide Professional Services
If you fail to provide professional services that a client expects, you could be sued for damages. For example, if a financial advisor fails to disclose a potential conflict of interest or doesn’t provide adequate advice, that could lead to a lawsuit.
