Professional Liability Insurance Primer
Thursday, February 17, 2011
"To err is human, to forgive
divine,” wrote Englishman Alexander Pope (1688-1744).
In today’s litigious
environment, "To err is human, so you’d better have professional liability
insurance,” might be more appropriate.
No one is perfect all the
time. Whether you’re new to the
management consultant business or you’re an experienced practitioner, mistakes
can and do occur during the course of an engagement.
Whether a claim has merit or
not, once a lawsuit is filed against you, you become caught up in the legal
process. You will have to retain an
attorney. With triple-digit hourly
rates, legal fees can add up and start looking like mortgage payments.
Your best defense? A professional liability insurance
At Aon, one of the things
we’ve learned from our management consultant clients is that there is some
confusion regarding how professional liability
insurance works. Here is a quick primer
to help you with the basics.
What’s the difference between professional
liability and errors and omissions
insurance, errors and omissions insurance, E&O insurance, and malpractice
insurance are all different names for the same thing.
What does professional liability insurance do for me?
professional liability claim is triggered when a client alleges that you were
negligent or made an error on the job that caused them financial harm. For
management consultants, this might involve:
- Missed deadlines
- Misrepresentation of
- Negligent handling of
- Improper fact
- Breach of
- Employee theft and
sale of trade secret
In the event of a covered
claim, professional liability insurance can pay:
settlements ruled against you, up to the policy limit
costs up to the limit of your policy
Does general liability insurance protect me from professional liability
No. General liability insurance pays for bodily
injury and property damage claims.
For instance, a client trips
over a crack in your sidewalk, is injured and sues you for their ‘pain and
suffering.’ Or while at your client’s
office you accidentally damage their equipment.
The best way to pick up
general liability coverage is through a Business Owners Policy (BOP). These specially priced package policies
include general liability and property insurance, which can protect your
business property against such damages as fire, theft and windstorm.
What does professional liability insurance cost?
premiums depend on your location, limits of liability, deductible, size of your
staff, annual revenues and historical claim experience. If you choose the IMC-endorsed policy through
Aon, having your CMC certification could have a positive effect on your
professional liability premium.
If you have questions about
professional liability insurance or other business insurances, contact Aon
Affinity. We can help tailor the right
type of protection to your specific needs and use our industry contacts to
secure you the best price.
David Glaser is a broker and account specialist at
Affinity. He has his property & casualty
and life & health licenses in all 50 states and is nearing completion of
his Chartered Property Casualty Underwriter (CPCU) designation. For assistance
call David at (215) 773-5324 or email him at firstname.lastname@example.org.