Professional Liability Insurance: A Policy for All Professionals?

Professional liability insurance, errors and omissions liability insurance, or malpractice insurance -- call it what you wish -- this type of policy protects the professional against negligent acts, errors and omissions that result in a client suffering property damage, personal injury or bodily injury.

For specific areas, the professional liability insurance is also quite specific such as insurance agents and brokers liability insurance; accountants professional liability insurance; lawyers professional liability insurance or lawyer malpractice insurance; medical malpractice insurance or physician malpractice insurance; nursing professional liability insurance; dental malpractice insurance; and chiropractic malpractice insurance.

And lest you think this is insurance only for the doctors, accountants and lawyers among us, add these fields to the list as well and they barely skim the surface of who needs this coverage: acupuncture malpractice insurance; dental hygienist professional liability insurance; psychologist malpractice insurance or psychologist professional liability insurance; patent attorney malpractice insurance; pharmacist malpractice insurance; social work malpractice insurance; massage therapy malpractice insurance; and even paramedic malpractice insurance.

If you present yourself to the general public as having greater than average knowledge in a particular field, this insurance is designed for you. We live in a highly litigious society and if something goes wrong with a service, chances are you could be subject to a lawsuit. The policy covers you if you make a mistake such as if you are a doctor and leave a sponge in someone’s chest cavity after closing up the operation, a financial planner who recommends a highly questionable investment that goes south, or a lawyer who forgot to appeal a case in the allotted time. It will also cover you from claims that are untrue but nevertheless have to be settled in court.

Small business people, particularly those running home businesses, often think that they have this insurance coverage when they do not. The business liability policy typically makes a point of not covering damages due to professional errors. And that homeowner’s policy will exclude anything that is business related.

Cost of this type of insurance varies widely. We have all heard stories about the horrendous costs of doctors malpractice insurance. The truth is that the average cost of malpractice insurance varies widely. The best way is to get with your agent and ask the question: how much is malpractice insurance for my business? An insurance provider also might offer differing rates for various geographies. It is probably a safe bet to assume that Indiana malpractice insurance rates and Illinois malpractice insurance rates, will vary from California or New York.

You need to discuss this area of insurance with your insurance agent to get the best protection that you can because there are so many varied insurance products on the market. For example, a recent visit to the insurance giant State Farm Insurance’s website revealed a whole page on “Special Business Liability Insurance.” These insurance products included:

  • Architects & Engineers Professional Liability
  • Accountants Professional Liability
  • Commercial Liability Umbrella
  • Dentists Professional Liability
  • Employment Practices Liability (EPLI)
  • Miscellaneous Errors & Omissions Liability
  • Not-for-Profit Directors & Officers with Employment Practices Liability
  • Technology Services Errors & Omissions Liability

Tips for Buying Insurance

Here are several key tips to keep in mind when shopping for this insurance:

  • Work with an insurance agent who is very knowledgeable about your profession or field. Typically, you can find a great agent through your business or professional association or perhaps through a company similar to yours. For example, there is a long history of medical malpractice insurance claims so anyone in a medical profession would be wise to deal with an insurance company and brokers that specialize in such insurance and claims.
  • Although any such policy will pay for judgments against you up to the limit of your policy, make sure there is a clause in there that says that the policy includes costs of court defense.
  • Get coverage for intellectual property infringement in the policy.
  • Ensure it covers personal injury areas like slander, invasion of privacy.
  • Ensure the policy has worldwide coverage.
  • Ensure it covers you, employees, contractors and subcontractors.

Glossary of Terms

Definition professional liability insurance – It is defined as insurance that protects a professional practitioner against claims and lawsuits that he or she acted in a negligent manner and caused bodily or personal injury to a client or caused property damage.

Medical malpractice insurance – This insurance is a form of professional liability insurance. While costs vary widely depending on the professional, the medical malpractice insurance premiums have been extremely high.

Errors and omissions insurance policy – An errors and omissions insurance policy is another name for the professional liability insurance policy.

Intellectual property – Definition intellectual property is property that is a creation of the mind. Under the law, owners of this property are granted certain exclusive rights over these intangible assets. These assets could include musical, literary or artistic works. They also could include inventions, words, phrases, symbols and designs. These rights are protected through trademarks, copyright, patent, industrial design rights and sometimes trade secrets.

Links to Insurance Articles in This Section

Workers Compensation Insurance

Home Business Insurance

Comprehensive General Liability (CGL)

Comprehensive General Liability (CGL)

Professional Liability Insurance

Product Liability Insurance

Product Liability Insurance for Small Business

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