Professionals who engage in business are regularly exposing themselves to risks associated with the performance of their services. Professional indemnity insurance policies can be purchased to address those risks. Businesses will commonly look to a general liability policy for protection, however this policy is limited regarding to the types of liability claims it will cover. Professionals need a special type of policy that will address specific errors or omissions that may occur by virtue of their practice. This could mean improper, illegal, or negligent acts that cause injury or damage to others, but which are born out of a failure to properly render professional services.
For example, if an attorney provides bad legal advice, his client may suffer the consequences and incur costs and damages. If the client makes a claim against that attorney for his negligence, the attorney can look to a professional liability policy to provide protection. This type of protection for malpractice is valuable for many types of professionals including insurance agents, specialty consultants, engineers, insurance agents and brokers, or any other business that relies on professional expertise to provide services to others. Examples of issues covered by a professional liability policy include libel and slander, infringement on intellectual property rights, errors and omissions, employee dishonesty and many others.
In most cases, a professional liability policy is designed to cover a variety of professions, and may contain endorsements specific to a profession if necessary. Some policies are drafted for the sole purpose of providing protection to a certain type of professional, such as medical malpractice insurance, which is designed to protect medical professionals. There are also policies designed to protect Directors and Officers from liability associated with their position on a board of directors, or as an officer of a corporation. These are commonly referred to as Directors and Officers policies.
As society becomes more litigious, the protection afforded by a professional indemnity policy cannot be ignored. It is common for large judgments to be rendered in cases of professional negligence, and a general liability policy will often exclude coverage for these types of claims. An uninsured professional could be faced with paying a large judgment out of pocket.
Professionals should consult with an insurance agent or broker that has experience in their field of expertise. A careful review of all of the professional’s activities, clients, and contracts should be reviewed when developing an appropriate risk management strategy relating to professional liability.