Professional liability insurance is a special type of coverage meant to protect professionals against negligence and that might be initiated by their clients. It is necessary to obtain professional liability insurance even if you have general liability insurance because it protects against claims arising out of your conduct as a professional, such as negligence, malpractice or misrepresentation, while general liability insurance does not. Also known as professional indemnity insurance (PII) or errors & omissions (E&O), professional liability insurance prevents you from having to pay the full cost in a civil lawsuit brought against you. It encompasses many professions, including doctors, lawyers, and consultants. One group of individuals that commonly uses professional liability insurance is those in the realm of counseling and therapy. There are several reasons counselors and therapists choose to obtain professional liability insurance:
Alleged or actual negligence
Errors and omissions insurance is meant to protect professional involved in lawsuits that allege fault on the part of the professional. This could mean allegedly leaving out important information or providing the client with incorrect information, which ultimately led to financial or bodily harm to the client. In the case of counselors and therapists, this may take the form of negligence in failing to notice the symptoms of a disorder. It could refer to offering incorrect advice, such as telling someone to ignore a symptom when it is actually problematic. This can also be known as negligence. For example, when a practitioner who has been entrusted with the care of a client neglects his or her job and the client suffers harm, he or she may have neglected the patient.
Errors and omissions coverage includes misrepresentation when a professional is accused of misleading a client by telling them a knowingly false and incorrect statement. It can also apply to violations of fair dealing and good faith when a professional has broken the trust of the client and/or breached the terms of the agreed-upon contract. The important thing to keep in mind is that professional liability insurance will protect the insured professional whether the negligence is alleged or actual. Whether you have to pay a settlement or simply lose out on legal fees, the goal of the insurer is to provide you with a safety net to fall back on.
Hiring a lawyer to defend you in a professional liability lawsuit is expensive, and costs will skyrocket the longer the trial lasts. As a result, professional liability insurance will cover the costs of a legal defense team so that you don’t have to worry about paying out of pocket. However, this does not apply in the case of criminal prosecution. This can happen when the insured counselor or therapist is accused of breaking the law and causing permanent harm to an individual or group.
In the case of a lawsuit alleging negligence or incorrect advice, you may be subjected to libel or slander on the part of the plaintiff that can cause permanent harm to yourself or your business whether you are a private practitioner or work for a corporation. Professional liability insurance protects you from the costs associated with this and ensures that you can defend yourself against these claims.
Claims and damages
In the case that you lose a large claim, you may face damages. These damages may include punitive damages that can add up to hundreds of thousands of dollars. Professional liability insurance is meant to absorb that cost so that you can maintain the financial stability of your business. It covers both monetary damages and non-monetary relief, such as the reinstatement of an employee or recovery of a counseling plan by a client.
This insurance can apply to both services and products that lead to personal or financial loss due to the actions taken on the part of the insured. Examples can include providing a client or customer advice that is clearly incorrect or misrepresenting what a product is capable of achieving. The ultimate thing to keep in mind is that the customer seeking damages claims that your actions as a professional have harmed him or her. Damages can also be punitive, which are applied by the court in order to prevent the individual or business from engaging in the erroneous activity or omission in the future, as well as discouraging others from following in their footsteps.
If you are a business rather than a private practitioner, it can be very useful to have professional liability insurance so that you can protect your company in the case that a civil lawsuit is brought against one of your employees. Not every counselor or therapist that you employ will have their own insurance. As a result, you can keep your business safe if a claim should arise.
Professional counselor and therapists can consult with a local insurance agent to learn more about the benefits to investing in a professional liability insurance policy for practices of all sizes.
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