Professional Liability Insurance
What is professional liability?
There are so many external factors beyond your control that can affect your business success. Your company can be hit with allegations of misrepresentation, breach of contract or wrongful business practices. And it can happen more easily than you might think — at any time. Professional liability insurance can protect your organization if it does.
Professional liability insurance protects businesses against charges of negligence or harm, based on a professional service or advice you provided. It’s also known as errors and omissions (E&O) insurance.
Professional liability insurance covers defense costs, judgment, settlements and fines or penalties resulting from the allegations of misrepresentation, breach of professional services, wrongful business practices, misleading advice and conflict of interest.
The math makes simple business sense: It costs much less to prevent professional liability insurance claims than it does to defend them. Commit to these best practices to reduce your professional liability exposure.
Keep Your Professional Liability Insurance Policy Up to Date
Your business is always evolving. Use your annual policy review to discuss professional liability insurance with your broker. Consider questions such as: Have your professional services offerings expanded? Have you changed the way you deliver them? How do the changes impact your professional liability risks and should your coverage be adjusted?
Don’t Embellish Your Profile
Whether yours is a publicly traded, private or nonprofit organization, it’s important to define your professional services duties as explicitly as possible. And that practice should extend to any third-party service providers tasked with making key decisions and offering counsel to your customers.
Limit All Conflicts of Interest
Investigate all potential conflicts of interest thoroughly. Be prepared to bow out if they can’t be resolved. For any gray areas, make a disclosure in writing to all interested parties and provide explicit guidance to employees to act only in the best interests of your customers.
Write Comprehensive Contracts
A well-written business contract that describes what is and is not included in the professional services you offer can prevent unfounded claims in the future. Spell out the rights and responsibilities of all parties to the contract.