Professional Liability Insurance in NJ
Accidents and mistakes happen. Are you protected against them?
Professional liability insurance can protect you from financial losses due to claims on behalf of your clients and customers. Here is a guide to what this type of coverage entails.
What is Professional Liability?
Professional liability insurance is a type of business insurance coverage that typically covers companies and workers against claims of negligence made by customers.
Such negligence can include:
- Giving inaccurate advice/information
- Selling a faulty product
- Leaving work unfinished
- Failing to meet promises agreed in a contract
Other terms used to describe this form of insurance are Errors and Omissions (E&O) and professional indemnity insurance. Some people use E&O as a specific type of professional liability catered to advisers and those in financial services, however, E&O and professional liability are used interchangeably in most cases.
Professional liability is different from general liability. While general liability protects businesses against claims of injury and property loss or damage, professional liability insurance aims to cover financial loss, which is not included under general liability.
Who is this Policy For?
This insurance option was traditionally used to protect doctors, lawyers and accountants from claims of negligence. Today, professional liability insurance can protect many other types of professionals including pharmacists, architects, engineers, opticians, beauticians, insurance agents and many more.
Other professional advisers such as brokers, financial advisers and surveyors may also benefit from this type of insurance.
An Example
A customer hires a surveyor to look at a property, before buying it, to verify there is no damage that would result in future costs. The surveyor checks the property, but fails to notice a crack in the roof.
The customer buys the property only for the roof to cave in a year later, and then sues the surveyor for negligence. The surveyor has taken out a professional liability policy, which helps to pay for this claim, and allows the customer to repair the damage.
Do I Need Coverage?
Most companies can benefit from taking out professional liability insurance.
Any business can make a mistake, but certain mistakes can cause a customer to sue for negligence if expectations aren’t met. Professional liability coverage can help cover any costs that such a legal claim may result in.
If you feel that there is a risk of being sued for an error, it might be worth getting coverage.
How Can I Reduce The Risk Of A Claim?
Reducing the risk of a lawsuit can help you avoid an insurance claim.
Certain measures that can reduce risk include signing legal contracts, thoroughly training your staff and enforcing quality checks.
Legal contracts and adherence to policy can help reduce the risk of a claim, but some errors can’t be avoided.
Human error can’t always be completely prevented. That’s why having professional liability insurance coverage is so important.
