A Midwest-based boutique Internet marketing firm that provides new business leads to law firms around the country, faced false accusations that they provided legal advice without a license to practice law. The case, filed by a single competitor in each of the 35 states where the company does business, put the firm’s entire business on the line. If the firm was restricted from working in any of the 35 states where they operated, their entire business would be forced to close.
What began as an erroneous claim took the company three years, $1.2 million in legal fees and significant manpower to defend. But, ultimately, they prevailed. While their Professional Liability insurance policy with HUB covered the fees after they met their $25,000 deductible, the carrier subsequently dropped the firm’s coverage after paying the claim. HUB was able to find them a new carrier without any lapse in coverage.
Fortunately, this marketing company had the proper coverage to protect them through such a lawsuit. But, most businesses just assume their general liability (GL) policy will cover them like an umbrella in all areas of liability. GL policies only cover personal injury and property damage - never professional errors and omissions. Similarly, many professional services firms have the misconception that if they didn’t make a mistake and there was no error on their part, they face no exposure. The reality is that even false claims have to be defended – some, even as in this case, for as much as $1.2 million.
Determined solely by the individual businesses’ unique risk and past claims, Professional Liability coverage must be negotiated by an experienced broker, as no standard Professional Liability coverage policy exists. Instead, each policy is subject to the business and its individual exposures. Working together, HUB brokers can tailor your Professional Liability coverage to limit the financial burden from claims made against your company.