There are many types of insurance available for businesses, and as such those in professional sectors are often unsure which are appropriate for them to acquire, and how much coverage is needed. One of the most common questions we get is related to the differences between professional liability insurance, malpractice insurance and errors and omissions insurance (E&O).
Let’s take a closer look at how these terms relate and which you should consider if you are a medical professional preparing to open or grow your practice.
Protecting Professional Service Providers
There are several situations in which insurance is needed for someone in a professional services industry. Even if you are not working with materials and hold minimal property, you can be sued by your clients for breach of contract, incomplete or low quality work, and oversights and errors made by you or your team in the service of a contract.
A good professional services policy is designed to help cover the cost of the legal defense fees needed to field these lawsuits, as well as the relevant court costs, and the eventual settlement or judgment in many of these cases. Depending on the industry, the amount of coverage and protection you need will vary, and in many cases, have a different name.
Why is this coverage so important? Because you don’t need to have done anything wrong to be sued. Someone can decide they are unhappy with the quality of your service for no reason other than that their own business is having financial difficulties and they need someone to blame. In rare cases, they will take that displeasure to the next level and file a lawsuit, which can cost you a lot. Good insurance coverage will protect you against the financial cost of these frivolous suits, if not the time it takes away from running your business.
What is the Difference Between These Policy Types?
A professional liability policy can be crafted for one of several industries. The goal of the insurance is to cover lawsuits for liability in the case of damage to individuals being served by a professional. That can mean protection for stock brokers from clients who are unhappy about their portfolio’s performance, failure in the design of a building or addition by an architect, or poorly handled taxes by an accountant that lead to an audit.
As such it can also mean medical malpractice insurance for anyone who works with patients – doctors, psychiatrists, dentists, or practitioners who work directly and solely with a patient. The difference is that medical malpractice is designed specifically for the types of lawsuits that occur when a patient feels they have been wrongly treated. Professional liability insurance can apply to almost anyone in a variety of fields, and will always be customized to the specific types of risk faced by professionals in that field, including the specific types of liability covered, and amount of coverage needed.
For certain industries, this type of insurance may also be known as errors & omissions insurance (E&O). Most often, liability insurance with this label applies to accounting, technology professionals and consultants, and real estate agents – though because these terms are often interchangeable, there may be differences depending on the industry.
Protecting Your Business from the Cost of a Lawsuit
If you work with clients or patients in any capacity, you are inherently at risk. Even with ironclad contracts and a high quality of work, mistakes can happen, and even without mistakes, all it takes is one angry client filing a lawsuit to ruin everything you’ve put into building your business into what it is today.
Unsure if you have the coverage needed to protect your business against potential legal action? Contact us and ask to speak with one of our professional liability experts for a review of your current policy: