Professional liability insurance, also known as errors and omissions insurance, is a type of insurance that protects professionals from financial losses due to mistakes or failure to perform their professional duties. In simple terms, it’s insurance that can help cover the cost of legal defense and any settlements or judgments that may be awarded to a client as a result of a professional error or omission.
In Oregon, any professional who provides a service or advice to clients and may be held liable for mistakes or oversights in their work would require this type of insurance. This includes, but is not limited to, doctors, lawyers, accountants, architects, and engineers.
For example, if a doctor fails to diagnose a patient’s condition, they may be held liable for any resulting harm. Professional liability insurance would help cover the cost of defending the doctor in court and any damages that may be awarded to the patient.
Similarly, if an architect designs a building that doesn’t meet local safety codes, they may be held liable for any resulting accidents. Professional liability insurance would help cover the cost of defending the architect in court and any damages that may be awarded to those affected.
It’s important to note that Professional liability insurance is not the same as general liability insurance, which covers claims of bodily injury and property damage. Professional liability insurance specifically covers claims arising from mistakes or oversights in the professional’s work.
Professional liability insurance is a must for any professional who provides a service or advice to clients and may be held liable for mistakes or oversights in their work. It can help protect their business and personal assets in the event of a lawsuit.
Professional liability insurance is not just limited to doctors, lawyers, accountants, architects, and engineers. Other types of businesses that may require this type of insurance include, but are not limited to:
- Consultants: Business, management, and IT consultants may be held liable for mistakes or oversights in their advice or recommendations to clients.
- Tech companies: Software developers, web designers, and other technology professionals may be held liable for errors or omissions in their work, such as data breaches or system failures.
- Real estate professionals: Realtors, property managers, and home inspectors may be held liable for mistakes or oversights in their work, such as failing to disclose known defects in a property.
- Design professionals: Graphic designers, interior designers, and other design professionals may be held liable for mistakes or oversights in their work, such as copyright infringement or design errors.
- Financial professionals: Investment advisors, stockbrokers, and other financial professionals may be held liable for mistakes or oversights in their work, such as providing bad advice or mismanaging investments.
- Marketing and advertising professionals: Marketing agencies, advertising agencies, and other marketing and advertising professionals may be held liable for mistakes or oversights in their work, such as defamation or false advertising.
It’s important to note that the need for professional liability insurance depends on the nature of the business, the services provided and the laws of the state, thus it’s always best to consult with an insurance agent or broker to determine if your business needs it or not.
If a business does not have professional liability insurance and a client or customer files a lawsuit claiming a professional error or omission, the business would have to pay for the legal defense and any settlement or judgment amounts out of their own pocket. This can be financially devastating for a business, especially if the settlement or judgment amount is high.
Not having professional liability insurance can also damage the reputation of a business. Clients and customers may be hesitant to do business with a company that does not have the necessary insurance to protect them.
Additionally, if the business is part of a professional association or regulatory board that requires its members to carry professional liability insurance, not having insurance may result in disciplinary action or loss of license to operate.
Furthermore, in some cases and states, not having professional liability insurance can lead to penalties and fines.
Not having professional liability insurance can put a business at risk of financial loss and can damage their reputation. It is important to consider getting professional liability insurance to protect the business and its assets in case of a lawsuit.
The best way to get professional liability insurance depends on the specific needs of your business. Here are a few options to consider:
- Consult with an insurance agent or broker: An insurance agent or broker can help assess the specific risks and liabilities of your business and recommend the best coverage options. They can also help you compare quotes from different insurance providers.
- Check for group or association plans: Many professional associations or industry groups offer group insurance plans for their members at a discounted rate. It’s worth checking if your professional association or industry group has such plans.
- Shop around: Don’t just go with the first quote you receive, compare different insurance providers and their coverage options. It’s important to make sure you are getting the right coverage at a fair price.
- Look for package deals: Some insurance providers may offer professional liability insurance as part of a package deal along with other types of insurance such as general liability or workers’ compensation insurance. This can be a cost-effective way to get multiple types of insurance.
- Consider online insurance providers: Some online insurance providers specialize in professional liability insurance and can provide coverage at a lower cost.
It’s important to keep in mind that professional liability insurance is not a one-size-fits-all product, so it’s best to assess your specific needs and compare different options before making a decision. Make sure the policy you are getting covers your specific area of expertise and meets the laws and regulations of the state you operate in.
