We all make mistakes. Sure, some slip-ups can be considered minor missteps, like when you accidentally forget your card at a restaurant or mix up the dates of your partner’s work event. But in business, even the most reasonable mistake can turn into a nightmare. That’s what insurance policies are for as miscellaneous professional liability.
When you have your own business or offer professional services to clients, you have to expect that things don’t always go to plan, specifically in the area of customer satisfaction. And today, a bad review isn’t the only way a disgruntled customer can express her point of view. No, people are ready and willing to sue, even if you didn’t mean to do anything wrong.
With all that said, there is a way to protect yourself and your business from these less-than-ideal situations: insurance can help. But you’ll want to have the right plan and coverage. General business policies may not cover claims based on internal error or failure to provide services, but miscellaneous professional indemnity insurance may. Check it out.
What is Miscellaneous Professional Liability Insurance?
Miscellaneous Professional Liability Insurance or MPL offers protection against financial losses that a business or professional could incur as a result of a lawsuit. Also know as errors and omissions or malpractice insurance in some industries, these policies can help cover legal fees. A customer who feels they have breached or failed to perform a contract for services may sue for a act, error, omission, negligence or breach of duty in the professional services rendered.
Imagine that you sign a contract with a client to offer him a service that does not meet his expectations. Even if you think he has, they can still claim that he didn’t keep his promise, even if your interpretation of it is skewed. While you may not be wrong, this client can still sue and you will incur those legal fees, even if the case is not resolved in their favor. Not to mention, you have to spend time making the case instead of your business.
Who should get Miscellaneous Professional Liability Sure?
Virtually anyone who owns a business, offers professional services, or acts as a consultant could benefit from having a mpl policy. If you have the potential to upset or disappoint a customer, you might want to use this type of policy, especially if the services you provide have the ability to vary from person to person. Not to mention, whether the service or advice you charge a client could potentially cost that client money in losses or possible lawsuits against you.
For example, if you are an IT consultant and your client suffers a data breach and the software you recommended did not adequately protect their systems, you could be held liable. Essentially, if your industry offerings require specific expertise, general liability policies will not offer protection against claims for malpractice, negligence, or misrepresentation arising from your professional practices.
Industry Tailored Professional Responsibility
In order to effectively manage the risks associated with different professions, miscellaneous professional liability is often divided into specific categories based on the nature of the professional services being provided. This categorization allows for personalized coverage that addresses the unique risks and challenges faced by professionals in each field.
The categorization of miscellaneous professional liability insurance is based on the understanding that different professions have different areas of expertise, responsibilities, and potential sources of liability.
Here are some examples of industries with specific professional liability needs and their coverages:
- Legal Professional Civil Liability Insurance: This type of insurance is designed for lawyers and law firms, covering claims arising from errors, omissions, negligence or breach of professional duty in the practice of law.
- Medical professional liability insurance: Also known as medical malpractice insurance, provides coverage to healthcare professionals, including doctors, nurses, dentists, and other medical professionals, for claims related to medical error, negligence, or improper treatment.
- Accounting Professional Liability Insurance: Accountants, auditors and accounting firms can obtain this coverage to protect themselves against claims arising from errors, inaccuracies or professional negligence in their financial advice and services.
- Technological Professional Civil Liability Insurance: Also known as errors and omissions, this coverage is designed for technology companies, IT consultants, software developers, and other technology professionals. Protects against claims resulting from errors, omissions, or failure to deliver promised services or products.
- Real Estate Professional Civil Liability Insurance: This coverage is for real estate agents, brokers, property managers, and appraisers. Provides protection against claims related to errors, misrepresentations or negligence in transactions or property management.
Do states legally require Miscellaneous Professional Liability?
While most states do not require businesses to carry miscellaneous professional liability insurance, some may require a special license to practice professionally, and acquiring that license requires you to have an MPL policy. Some government or customer contracts may also require you to carry MPL to work in certain industries. Below are some common professions that have some sort of requirement:
- Health care: Some states, such as Colorado, Massachusetts, and New Jersey, require practicing physicians to have Miscellaneous professional liability insurance. However, in California, doctors are only required to carry a professional liability insurance policy if they perform outpatient surgery. On the other hand, therapists and counselors in many states are not usually required to carry malpractice insurance.
- Lawyers: While not required to offer professional services, some states require attorneys to notify their clients if they do not have a certain level of coverage. Ohio and Pennsylvania require attorneys to carry malpractice insurance with policy limits of $100,000 per claim and an annual aggregate of $300,000, or to notify clients in writing if they do not have this coverage. Texas requires coverage of $100,000 per claim, or set aside as a self-insurance contingency fund. And Oregon requires attorneys to obtain this coverage through a state fund.
- Real Estate Professionals: MPL is not required in the US, but in the state of Nebraska, real estate professionals will require a state program administrator to certify to the Real Estate Commission that an applicant for a new (or renewal) license has proof errors and omissions insurance.
- insurance professionals: Similarly, not required for most insurance professionals in the US, Rhode Island insurance producers are required to have an E&O policy with a limit of $250,000 per event and a total limit of $500,000.
Ultimately though, just because you can get away with not having it, doesn’t mean you should. TO The Miscellaneous Professional Liability policy will protect you in ways that a General Liability plan cannot. And even if you provide perfection, it doesn’t mean the customer will see it that way.