Due to the increasing number of liability lawsuits against professionals amongst a wide variety of industries, whether valid or unfounded, these claims can lead to financial ruin both professionally and personally, including the loss of cars, homes and careers.
Professional liability insurance offers protection for individuals and companies from assuming the full cost of defending a lawsuits claiming negligence on behalf of the individual or business.
Negligence, malpractice or misrepresentation claims are not covered by a general liability insurance policy. This is one of the main reasons why professional liability insurance is necessary for those who provide a service or advice for a fee.
There are various types of Professional & Management Liability Policies that are industry specific; Cyber E&O, Director & Officers, Employment Practices liability and Malpractice to name a few.
Other Business Insurance Policies to Consider
As the lines of responsibility between design firms and contractors merge, contractors are assuming nontraditional risk that their core insurance coverages may not address. Professional liability coverage has become just as essential to a contractor as it is to an architect or engineer.
A general liability policy without a professional exclusion amendment can provide limited protection for design errors as long as the loss results in bodily injury or property damage. However, many insurers will attach an endorsement to their contractor’s policies that excludes liability arising from design error (Insurance Services Office, Inc. (ISO), Form CG 22 43).
A Cybersecurity policy is designed to protect and mitigate insureds from a multitude of cyber incidents, including data breaches, business interruption, and network damage to name a few.
Cybersecurity Liability Insurance covers these circumstances and more:
Directors and officers liability insurance provides coverage for specific risks of directors, officers, and other high-ranking executive professionals. D&O Insurance pays for claims arising from; release of information deemed confidential, poor investments made by the officer, unlawful acts, firing and hiring issues, conflicts of interest, and gross negligence.
D&O insurance will cover damages and legal expenses that are the result of managerial actions or decisions resulting in financial loss.
EPLI covers businesses against claims by workers that their legal rights as employees of the company have been violated. The number of lawsuits filed by employees against their employers has been rising. This coverage provides Employer protection from a range of employee-based lawsuits including claims of:
EPLI coverage is usually written on a claims-made basis. This means the incident resulting in the claim had to occur during the coverage period. Because employment claims often come months or even years after the alleged incident, your company might be vulnerable if your insurance coverage was dropped or if tail coverage (liability insurance that extends beyond the end of the policy period) wasn’t purchased.
Establishments that serve alcoholic beverages are exposed to lawsuits charging that they served liquor to intoxicated persons who was later involved in an accident. Common Businesses that need liquor liability insurance are; service businesses like restaurants, hotels, taverns, sports bars, package stores, halls and private and fraternal clubs, nightclubs, riverboat casinos, bowling alleys, special events and even bed and breakfasts.
The Commercial General Liability Coverage Form specifically excludes liquor related losses if your business sells, manufactures, distributes, serves, or furnishes liquor. In addition, many insurance companies exclude liquor coverage by endorsement for any operation that regularly serves liquor on or off premises, even though they are not considered “in the business.” If your business has a liquor exposure – Liquor Liability Coverage is a must.
This insurance is only for medical professionals and people in the healthcare industry. It guards against losses due to mistakes or negligence. This policy type protects insureds for losses resulting from injuries to third parties when a professional’s conduct falls below the profession’s standard of care. For example, if a doctor makes a mistake that other doctors of his specialty would not have made, his patient might sue him. A malpractice policy will pay his/her defense costs and any judgment or settlement.
This specific policy type is designed to protect traditional professionals (accountants, attorneys, real estate brokers, consultants, etc.) against liability incurred as a result of errors and omissions, giving faulty advice or counseling a client when the advice leads to a financial loss, in performing their professional services.
There are a few specific exceptions or excluded professionals (physicians, architects, and engineers), who have professional policies designed for their professional.
The key feature of Professional liability policies is they only cover economic or financial losses suffered by third parties, as opposed to bodily injury (BI) and property damage (PD) claims.
Bodily injury and property damage claims are typically covered under commercial general liability (CGL) policies.
Most Professional liability policies are written on claims-made coverage. Also, when investing in a Professional liability policy, you should consider that these policies commonly contain one benefit that includes legal defense costs. This can vastly reduce the coverage amount for the claim should a judgement in favor of the plaintiff be rendered.
The following bullet points should be considered when making a decision regarding a business need for Professional & Management Liability insurance: