Even the most conscientious, careful, capable professionals are not immune to making mistakes – big mistakes – that can have serious financial repercussions for their clients. Sometimes, even when no mistake has been made, a client insists that his accountant, lawyer, engineer, etc. has made a mistake (an error) or neglected to do something (an omission) that resulted in a financial loss (directly or indirectly). That’s why it’s wise for professionals to have good Professional Liability Insurance.
Professional Liability Insurance Goes Beyond General Liability Insurance
Many professionals assume that if they have a general liability insurance policy, they’re protected from all of the risks they face in the course of doing their jobs. While it’s true that general liability insurance provides a good blanket coverage for lawsuits related to bodily injury, false advertising, slander, and property damage, there are nuances that general liability insurance does not cover.
Professional liability insurance is an added layer of protection for businesses that provide professional services, including doctor’s offices, law firms, accounting firms, event planners, engineering firms, etc. Professional liability insurance provides financial protection to protect individuals or businesses in case they are sued for errors or omission (aka mistakes or negligence) resulting in financial harm to a customer or patient.
E&O Policies: Examples of What They Cover
According to an article in the Insurance Journal, E&O policies are valuable because they cover both tangible and intangible losses. The article specifies two real-world examples that would trigger E&O coverage:
If a wedding planner books a client’s banquet hall, caterer, band, etc. for June 14 instead of the June 21 (the actual wedding date), someone will have to pay for this very expensive mistake (the vendors would need to paid for the day they showed up by mistake, and then be paid again to show up on the correct day.) Additionally, the bride and groom could make a compelling case for damages related to emotional distress.
If a shipping company sends a manufacturer’s equipment to South America instead of South Africa, where the manufacturing facility is, someone will have to pay the cost to re-ship to the right destination. The client could also lose business due to the delay (or for appearing incompetent to his customers.)
If your business provides professional services in any capacity, and you’re able to agree that neither you nor your employees are perfect, professional liability coverage is a very wise investment.
About Newman Crane & Associates Insurance
Deciding what coverages you need and what limits and deductibles make the most sense can be tricky. Since 1965, Newman Crane & Associates Insurance has been helping Central Floridians make sense of their options and make the smartest choices for their circumstances. We encourage you to contact our friendly, experienced, and capable team today. Call us at (407) 859-3691 for a consultation.