How To Reduce Professional Liability Claims

When it comes to Business Insurance a lot of companies have some level of risk when it comes to professional liability. This kind of coverage is not just for lawyers, accountants or doctors. Your business might have a risk in this area and you’re not even aware. Depending on the exposure, we recommend Professional Liability Insurance to many of our clients.

If you perform any of these services, you should consider Professional Liability Insurance sooner rather than later:
 

• Consulting of any kind
• Market research
• Accounting
• Advising
• Designing
• Advertising
• Technology related business
• Healthcare
• Professional services

 
How to Reduce the Likelihood of a Claim
 

1. Keep and maintain a professional code of conduct at all times (even on social media).
2. Consider Hold Harmless Agreements.
3. Make sure clients understand what their business does and doesn’t do, as well as all moving parts, fees and expenses, and any underlying risks and guarantees. You can never overeducate a client.
4. Have written procedures relating to client communication and follow-up. Most importantly, make sure it’s documented.
5. Do not provide advice if you are not qualified to do so.
6. Make sure to disclose all required information and be very upfront about your record of accomplishment and business practices

Most companies purchase general liability insurance to protect their business against certain kinds of claims. These claims could include bodily injury and property damage. It is very important for businesses to understand the difference between professional liability and general liability. As much as we want to run a perfect business, at the end of the day, mistakes (errors) can happen. If the mistake financially harms a client, you could be sued. Being prepared can go a long way to not only save your business, but give you peace of mind.
 
Lastly, just because Professional Liability isn’t required for a client/contract doesn’t mean you don’t need it or you’re off the hook. Being in Austin, TX, I work with a lot of tech startups. Some of these tech firms just want General Liability, and say, “that’s all I need right now”. Maybe they are waiting on funding, or it’s not required, or they’re just trying to save money. Some will go as far as getting an Umbrella because they think it will protect them. I’m not against Umbrella Insurance, just don’t think an Umbrella is going to pick up a professional liability risk when you don't have a Professional Liability Insurance policy for it to go over. If you have any questions about Professional Liability Insurance or any other Business Insurance, please feel free to contact me.
 
Jason Matison
Commercial Insurance Agent
Austin, Texas