A business has to control its costs wherever and whenever it can. In most situations, that involves simply forecasting future trends and planning accordingly. However, how can a business and its leaders plan for the unexpected? Who could possibly envisage a situation in which a company finds itself at the wrong end of a malpractice lawsuit? Fortunately, there is a way to offset most or all of the costs associated with such an eventuality, and it is called professional liability insurance.
What Is Professional Liability Insurance?
This is a category of business insurance that protects professionals from negligence claims initiated by clients or customers. A business or individual who applies their specific area of expertise in order to advise, treat or inform their clients should always have a professional liability insurance policy, often referred to as errors and omissions insurance.
Who Might Need Professional Liability Insurance?
Anyone who delivers a service based on their professed expertise should have this essential type of business insurance. Medical practitioners, such as doctors and chiropractors, will likely need medical malpractice insurance as a condition of their license to practice. Real estate agents, however, will usually have errors and omissions insurance. Accountants, business advisers and stock brokers will also usually carry professional liability insurance or their industry’s alternative.
Why Professional Liability Insurance Is Essential
Providing healthcare or an advisory service for clients is very rarely an exact science. Such practices are fraught with the potential for problems, mistakes and inaccurate predictions. When things go wrong and the client suffers financial loss or personal injury as a direct or indirect result, the business involved in providing expert advice or treatment could end up being sued. A professional liability insurance policy will cover the considerable legal costs involved in defending legal action, as well as the cost of damages up to the policy’s coverage limit.
A Case Study
A real estate agent recently helped a couple inspect, value and buy a home. The agent recommended that his clients employ the services of a property inspector to make sure that the house was in reasonable condition. The inspector identified a number of issues with the property, all of which were discussed in person with the agent present. It was agreed that the agent would liaise with the inspector, acquire a list of the actionable items and forward it to the buyers via email. This was done, and the sale went ahead. Unfortunately, a subsequent problem with the roof transpired, and the cost of repair ran into the thousands. While the agent maintained that he had sent the inspector’s report (with the roof issue mentioned), the clients sued the agent for malpractice. Because the agent had no proof that the email was actually sent, he was forced to defend the case with the help of his insurers. Had the agent not had sufficient professional liability insurance, his business and his future could have been in jeopardy.
If you’re a professional or a business owner with questions surrounding Colorado professional liability insurance, give us a call at 888-279-9701. We’ll be happy to assess your circumstances and guide you in the right direction.