Liable by Association: Understanding Professional Liability Insurance

By Mike Drew, The Reschini Group

The importance of professional liability protection to reduce financial exposure.
The importance of professional liability protection to reduce financial exposure.

A faulty assumption about insurance coverage related to job duties comes into play when one assumes he or she may be liable only when someone else suffers bodily injury, property damage, or personal injury.   The fact is, however, that’s what standard general liability coverage addresses.

If you are a professional – which covers everything from architect to home inspector, from attorney to physician, and from real estate broker to accountant, just to name a few – a special classification of liability insurance is required to handle other types of claims that may come against you, related to giving advice or providing a service that could cause a financial loss to a customer.  Membership in professional associations, some of which entitle an individual to list credentials as part of his or her name and identification, also point to the need for this type of coverage.

Errors and omissions, another way to refer to professional liability, is defined as follows:  “Errors & omissions in the U.S., is a form of liability insurance that helps protect professional advice- and service-providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit. The coverage focuses on alleged failure to perform on the part of, financial loss caused by, and error or omission in the service or product sold by the policyholder.”

For example, even a web programmer would be wise to have professional liability insurance.  How so?  Say the programmer delivers a website to a client, but if that platform did not perform properly – getting e-commerce transactions wrong, or not letting visitors to the site navigate to their intended destinations, resulting in lost revenue and a damaged reputation – the client could file a claim against the programmer, based on negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice.

A general liability policy would not be sufficient, since no one got physically hurt and no property had been damaged, so if the professional programmer only had this level of coverage, he or she would face a financial exposure that easily could have been avoided with the right policy.

Be sure about your coverage.  The professionals at The Reschini Group are well versed in these questions and how you can be adequately covered in any situation – including the ways in which you apply your professional expertise.  Contact us to learn more.

You’ve worked hard to achieve your professional recognition.  It’s worth protecting, with the proper level of coverage.

Copyright 2016 The Reschini Group

The Reschini Group provides these updates for information only.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.