Things To Know About Professional Liability Insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance or malpractice insurance, is designed to protect professionals from claims arising from their services. Follmer Insurance Services provides professional liability insurance in Ann Arbor, South Lyon, Brighton, Howell, Pinckney and surrounding areas.
These are key aspects to understand:
Coverage
Who Needs It: Professionals who provide expert advice or services, such as doctors, lawyers, accountants, consultants, and engineers, typically require this insurance. It’s essential for anyone whose professional judgment or services could be challenged.
What It Covers: This insurance covers legal costs and damages resulting from claims of negligence, misrepresentation, violation of good faith, and inaccurate advice. It protects against claims of errors or omissions that cause financial harm to clients.
What It Doesn’t Cover: It generally does not cover intentional misconduct, criminal acts, or general liability claims unrelated to professional services, such as property damage or bodily injury
Policy Details
Claims-Made vs. Occurrence Policies:
Claims-Made: These policies provide coverage if the claim is made during the policy period, regardless of when the alleged act occurred.
Occurrence: These provide coverage for incidents that happen during the policy period, even if the claim is made after the policy has lapsed.
Retroactive Date: For claims-made policies, the retroactive date is crucial. It determines how far back the coverage applies. Claims related to incidents occurring before this date are not covered.
Tail Coverage: This extends coverage for claims made after a policy ends, applicable to incidents that happened during the policy period. It’s vital for professionals retiring or changing careers.
Financial and Legal Considerations
Cost: Premiums vary based on the profession, claims history, policy limits, and the risk level associated with the services provided. Higher risk typically means higher premiums.
Legal Defense: The policy usually covers the cost of legal defense, which can be a significant expense even if the claim is unfounded.
Peace of Mind: Having professional liability insurance provides peace of mind, allowing professionals to focus on their work without the constant worry of potential lawsuits.
Conclusion
Professional liability insurance is a critical safeguard for professionals. It not only protects against financial losses from lawsuits but also supports maintaining a professional reputation by ensuring that any claims are managed effectively. If you need assistance, we’re just a phone call away.
