Professional Liability For Small Businesses

Today, almost any business can find itself facing a liability lawsuit. A Professional Liability lawsuit can put owner’s personal assets at risk including homes, cars, and other possessions. One simple mistake could cause financial devastation, as well as end your professional career. Many businesses don’t think they have an exposure to professional loss. Here are some examples of industries that need Professional Liability Insurance.

• Medical professionals
• Lawyers
• Real Estate Agents
• Contractors that provide management services
• Banking
• Accountants
• Technology
• Non- Profits
• Architects

Professional Liability Insurance is sometimes called Errors and Omissions (E&O) coverage. Claims come from errors or omissions in the performance of professional services. Companies that perform professional services for a fee are exposed to E & O claims. Often claims result from overlooking a critical piece of information, misstating a fact, misunderstandings, forgetting to do something, or misplacing something. In today’s world, the definition of “standard of care” has broadened through court cases and statute changes.

Here are a few actual claim examples:

• A Marketing Consultant failed to send email advertising in a timely manner and the client had lost revenue of $150.000. The claim was settled for $125,000.
• A Head Hunter placed an executive with a firm, but failed to complete due diligence regarding a non-compete agreement. The non-compete limited the executive’s ability to perform job duties. The new employer sued the head hunter for failure to disclose and won a $50,000 award.
• A Travel Agency was retained to assist a couple in planning a trip for their 25th wedding anniversary. A week prior to the cruise, the couple was informed that the cruise was booked incorrectly and the ticket price was actually $1,000 more per person. The couple was forced to cancel their trip and they sued the travel agent for negligence and the loss of their down payment. The case was settled for $25,000 and the travel agent had to pay $10,000 in defense expenses.