Professional Liability

Professional Liability

Professional liability insurance is a specialized type of liability coverage for individuals such as physicians, attorneys, certified public accountants, insurance producers, or directors or officers of corporations.

Professional liability refers to liability arising from a failure to use care (negligence) at the level of skill expected from the professional.

Several forms of professional liability insurance are common.

Malpractice

Medical malpractice insurance is available to physicians, surgeons, dentists, and hospitals. It protects against legal action brought by an injured third party due to the insured’s negligence in performing professional duties.

Coverage applies to the insured’s responsibility for bodily injury or property damage to others. Many policies also cover personal injury, such as mental anguish suffered by the injured third party due to the insured’s negligence or non-performance.

Many malpractice policies include a “consent to settle” clause. This requires the insurer to obtain the insured’s permission before settling a claim, which helps protect the professional’s reputation.

Errors and Omissions

Many professions use errors and omissions (E&O) policies. Examples include accountants, insurance producers or adjusters, architects, attorneys, stockbrokers, real estate brokers, and engineers.

Coverage is tailored to the profession. It pays for liability arising out of the performance of professional duties when the insured is alleged to have been negligent.

For example, if an insurance agent makes an inadequate recommendation that causes a customer financial harm, a resulting lawsuit will likely be covered by the agent’s E&O policy.

Directors and Officers

Another type of professional liability contract provides legal liability protection to a corporate director or officer for errors and/or omissions. This type of policy protects corporate leadership from lawsuits by stockholders or others alleging mismanagement.

Other profession-specific policies are also available, including:

• Druggists Liability
• Fiduciary Liability
• Employee Benefit Plan Liability
• Professional Architects Liability

Lesson Summary

Professional Liability Insurance includes forms for Malpractice, Errors and Omissions, and Directors and Officers coverage tailored to different professions.

• Malpractice - for physicians, surgeons, dentists, etc.
• Errors and Omissions - for various professions
• Directors and Officers - for legal liability protection

Chapter Vocabulary

Definitions

Errors and Omissions Liability

Liability coverage of a professional or quasi-professional insured to persons who have incurred bodily injury or property damage or who have sustained any loss from omissions arising from the performance of services for others, errors in judgment, breaches of duty, or negligent or wrongful acts in business conduct.

Malpractice

Alleged misconduct or negligence in a professional act resulting in loss or injury.

Medical Malpractice

Insurance coverage protecting a licensed health care provider or health care facility against legal liability resulting from the death or injury of any person due to the insured’s misconduct, negligence, or incompetence, in rendering or failure to render professional services.