Professional
liability is associated with the provision of services rendered for a
client who typically makes a claim against you.
Often this
claim is
against errors and omissions that you have made for the professional
services that you provide. If you are found liable for such services
then you can be up for quite a substantial claim, depending on the
contract and services that you offer to your client.
Usually
in the contract documentation it will be specified that you should
provide a minimum level of cover for the professional services that
you are providing for your client. This will then determine the level
of professional liability you are exposed to against the services
that you are providing.
What
happens in most cases against professional liability is that your
client suffers a financial loss due to the advice that you provide.
This financial loss then usually becomes the basis for the claim your
client makes against you. If you have professional liability
insurance then usually this claim will be covered by your policy.
Naturally however it will depend on the terms and conditions of the
policy that you choose to take out whether you will be covered for
the claim by your client.
Obviously,
if you are not covered by professional indemnity insurance then you
will in most cases be liable for the damages that your potential
client has suffered in relation to your services offered. However, if
you have taken out a level of PI insurance then you may be covered by
the insurance agency. This again depends upon the terms and
conditions set out in the professional indemnity insurance
documentation.
Traditionally
professional liability insurance and professional indemnity insurance
has been taken out by the major service professions such as
consulting engineers, architects, lawyers and accountants. However
due to the increase in the frequency and severity of claims against
professional services there are now a lot more professions wanting to
take out insurance policies against errors and omissions from the
services they provide.
For
example it is now generally becoming a more litigious environment
across the board. Therefore regardless of whether you are in a
traditional profession or not it is prudent to consider getting
professional liability insurance if you are considering offering
professional services to clients.
Perhaps
the largest new group of professionals to take out such insurance
policies are website developers and IT consultants. The reason for
this is that the services they provide can cause their clients to
suffer a substantial financial loss if the advice they give is
misleading or just plain wrong. Further, such professionals may omit
critical advice that their clients require in order to get the
projected results they expect from such services.
If there
are major omissions from the services that you are providing your
clients it may result in them making a decision that may effect their
financial risk into the future. If the services you provide are
deemed to be responsible for that financial risk then you may get a
claim against you for the services that you have provided.
It is
for this reason that many professionals in such industries are now
considering to take out professional liability insurance as part of
their risk management procedures.
If you
have decided to take out such liability insurance it is critical that
you choose the policy that is best suited to your needs and
circumstances. There is no point taking out a policy that does not
cover you for critical services that you provide to your clients and
places you at considerable risk. That is why it is often a good
course of action to engage the services of an insurance broker for a
quotation for public indemnity and professional liability insurance.
The
reason for this is that the brokers understand most of the terms and
conditions of the major insurance policies on the market. Plus they
will most likely know the best premiums that you should take out for
the coverage that you are likely to expect. For example if you don't
feel there is much of a risk for a large claim against you then you
may decide to take out a policy for $1 million coverage or less.
Obviously this will be dependent upon your individual circumstances
and the likelihood of a claim being made against you.
It is
for these reasons that if you are considering taking out professional
liability insurance that you firstly determine the risk and reward
structure of doing so, dependent upon your individual circumstances.
From there it is usually the best idea to contact an insurance broker
for a quotation. After you have received a number of quotations, make
sure to read through the terms and conditions of the policy document
in order to find the professional indemnity insurance policy that is
the best fit for the services that you offer to your clients.