Get to Know Insurance: Professional Liability
We’re back with another edition of Get to Know Insurance! Over the course of the last few months we’ve received several requests for professional liability, so we thought that would be a great topic this week! There are numerous types of professional liability depending on the type of professional, services offered and clientele. Finding and understanding the right policy for you or your organization is critical for long term protection and success!
There is an extraordinary amount of people who can and do call themselves professionals but not all those people are providing services that are considered professional services. Real estate agents, doctors, lawyers, insurance agents, consultants, accountants / bookkeepers, IT professionals, representatives of companies, anyone who has a vocational license and anyone on a board of directors are just some of the types of professionals that can benefit from a professional liability policy.
There are different kinds of professional liability policies that can be used to protect professionals depending on what their needs are. The most common types of coverage are Directors and Officers Liability (D&O), Errors and Omissions Liability (E&O), Fiduciary Liability and Employment Practices Liability. Some organizations need each one of these coverages and some only need one, it’s best to meet with an insurance agent to determine what your needs are.
Directors and Officers Liability, D&O, insurance helps cover defense costs and damages, settlements and awards, arising out of wrongful act allegations and lawsuits brought against an organization’s board of directors and/or officers. Claims like this have been on the rise over the last several years and without D&O insurance the board members and officers could be held personally liable. This is why a good D&O policy is a great tool organizations can use to attract and retain qualified executives and board members.
Errors and Omissions Insurance, E&O, is a specialized kind of liability insurance that protects against losses not covered by traditional liability policies. For example, if you’re business is printing and distributing wedding invitations and there is a misspelling, or the date is incorrect, E&O insurance protects you in the event of the client taking your company to court for the mistake. If a real estate agent forgets to disclose a problem with a property they’re listing and gets sued by the buyer, E&O insurance would typically cover the claim. Each policy is different so it’s best to work with an agent to make sure you’re adequately covered.
Fiduciary Liability Insurance is a very important coverage for businesses that either manage their own employees’ retirement plans or that manage retirement plans for other companies as a third party. If there are accusations of mismanagement of a company’s employee benefit plans, this policy would cover the legal expenses of defending against the claim, as well as the financial losses the plan may have incurred due to errors, omissions or breach of fiduciary duty.
Last, but not least, we’ll cover Employment Practices Liability Insurance, EPLI, which covers employers against claims made by employees alleging discrimination, wrongful termination, harassment and other employment related issues. This is a coverage that is very common in corporate America due to the value it provides to large organizations but is one that new or small businesses often overlook. Not only can these claims be large, small or new businesses often don’t have a legal department or employee handbooks explaining the policies and procedures that guide hiring, discipline or termination. Without these guidelines it’s much easier for an unhappy employee or ex-employee to have an advantage in court.
As we said previously, there is a wide variety of professionals throughout the many industry sectors in America. Not all of them need every type of professional liability insurance but some will. The types of coverage needed vary by the types of services that are offered. EPLI is a coverage that we recommend to any business owner that either already has or is planning on hiring employees. D&O is essential for public companies, nonprofits and any other organization governed by a board of directors. E&O is essential for any company that is trusted to give advice, complete a project or disclose information necessary for a transaction or decision to be made. Fiduciary liability is essential when handling money that belongs to others.
HD Insurance has been providing various types of professional liability to our clients in the nonprofit, governmental entity, legal, medical and many more sectors for over 25 years. We’re confident in our ability to not only find the right policy but at a competitive price and would be happy to answer any questions regarding professional liability to anyone that is unsure of whether or what kind of insurance they need.
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