Increasingly, professionals and certain occupations need special insurance protection as they are targeted by lawsuits. This is due to the high standard of accountability under which they operate.
In most instances, a commercial general liability policy will protect a business against damage or injury their actions may cause to others. However, this type of policy is designed to handle loss associated with fairly generic and low-risk activities. Examples are customers who cut their hands on a sharp edge of an office's reception desk or a customer who is hurt when she collides with a clerk stocking a shelf. In other words, the protection has most to do with covering liability connected to losses that occur on the business premises.
As opposed to risks connected to a location, the liability faced by professionals is created precisely by the service they provide. Some professions that are prone to dealing with lawsuits include the following:
- Media Services
- Nurses and Physicians (especially medical specialties)
- Public Servants
- Real Estate Agents
Reasons such persons are sued typically flow out of the following:
- Breach of Contract
- Confidentiality Breaches
- Misleading Third Parties
- Failed Medical Procedures
- Food Poisoning
Please see below for factors that drive the need for professional liability protection.
We discussed occupations that are more vulnerable to lawsuits. The following are reasons why higher stakes exist with professional activities.
Expert Status - Persons who need professional liability coverage are those the general public depends upon as experts. They help with special issues such as personal health, expensive business transactions, or personal crises. Many of these situations also involve a high level of emotion. When something goes wrong, it is much more likely that a client will pursue "justice" through the courts.
Reputation - Any claim a client makes against a professional involves that individual's reputation. In many instances, paying a claim bears the stigma of admitting to a mistake. As a result, the professional may suffer from a lowered status and could face sanctions from related professional associations or regulatory authorities. Further, many professionals are proud of their standing and abilities; admitting being wrong is usually fiercely resisted.
Defense Costs - Defending against claims of professional error or incompetence is usually very expensive and time-consuming. Trials will generally involve expert testimony and technical arguments, and the likelihood of resolving issues quickly (particularly via a settlement) is extremely low.
Identifying A Loss - The timing between when a loss occurs and when a claim or suit is filed can be a mystery. For example, a professional may find out she's being sued today for something that happened ten years ago. The potential for a considerable time gap before a loss arises makes professional liability a complicated type of business to underwrite and to price.
You have invested a lot in your business and your profession. So, it's essential to take the needed steps to deal with the special and the routine sources of loss. As usual, it is always a good idea to discuss your questions and needs with an insurance professional.