Professional liability insurance, as the name suggests, is a type of insurance that professionals across industries require to cover the risks they are exposed to.
In the US, this type of insurance is mandatory for many medical and legal professionals, including nurses, doctors, counselors, therapists, physical rehabilitation specialists, and attorneys. There are rules in every state that mandates attorneys to have professional liability insurance and advertise the insurance status to their clients.
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Additionally, tax laws, contracts, and other regulations specific to your industry also may tangentially mandate professional liability insurance. For instance, if you work on government projects, liability insurance becomes mandatory.
Federal Acquisition Regulations
If you are a contractor or supplier for government entities such as NASA or the U.S. Military, professional liability insurance is mandatory as per the Federal Acquisition Regulation or FAR.
Federal Acquisition Regulations is a set of laws that cover the procurement processes of the federal government. The FAR was established to ensure the policies and procedures related to procurement are uniform across all executive agencies.
Under the FAR, contractors or businesses that are engaged in government projects must carry insurance that ‘covers the perils’ that the contractor is exposed to.
The contractor or the business entity must have the relevant insurance, including professional liability insurance, when:
- there is the involvement of government property
- the contract work is related to government installation
Industries that require professional liability insurance
Although not mandatory in many industries, professional liability insurance is highly recommended for all business owners, independent contractors, and entrepreneurs who interact with clients.
In any type of business, errors, oversights, delays, negligence, or failure to meet client expectations can all attract lawsuits. For instance, in the construction industry, failure to adhere to the blueprint can have serious financial consequences for a client. Professionals in other industries are also exposed to multiple risks, such as graphic designers, accountants, Information Technology (IT) consultants, real estate agents, and so on.
Here is a closer look at two industries where professional liability insurance is a must-have, although not mandated by law:
Dietitians and nutritionists – Dietitians and nutritionists are engaged in giving out clinically appropriate dietary advice for clients for various health conditions apart from counseling on lifestyle modification and behavior changes. As a paramedical profession, these professionals are also liable to medical malpractice lawsuits.
For instance, if the dietitian prescribes a low carbohydrate diet based on the current scientific evidence, the client may allege that the diet was harmful in some way. The client’s lawyer may cite a contradictory article, or a study published in a lesser-known journal to prove their case.
Other areas related to dietetic practice also are exposed to risks, such as tube feeding and tending to patients in long-term care facilities. There also has been an increase in lawsuits filed for bariatric surgery that has gone bad. Issues such as the client losing excessive weight or having other digestion-related problems can attract lawsuits.
Engineers – The collapse of a warehouse in North Carolina was linked to a construction project being carried out by the city’s contractors. An engineering firm had been hired by the owner before the construction project to ensure the structure’s stability. The owner of the warehouse stated it would take $200,000 for repairing the warehouse, in addition to $80,000 expenditure related to equipment losses that he sustained.
In this case, the city can claim that the engineering firm was at fault and carried out faulty repairs of the warehouse, leading to its collapse.
Although uncommon, there are instances where the engineer or architect offers consultation on matters that fall outside the scope of their professional expertise, allegedly or actually. For instance, the architect may offer advice on sustainability that may not align with regulatory specifications. In all these cases, the resulting lawsuits are expensive and destroy the reputation of the professionals.
Even if it is a baseless allegation, lawsuits can cost thousands of dollars; the exact cost depends on the industry, the nature of the ‘error or omission,’ and other factors. The costs are related to your lawyer’s fee, the hourly rate of which can be between $100 and $300, as well as administrative costs, including data processing, copying, travel expenses, and shipping. There are also additional costs involved in getting expert witnesses to explain technical aspects to support your case. In case you lose the legal battle, you also have to bear the cost of the settlement.
Professional liability insurance covers legal expenses related to a lawsuit filed for a work mistake.
Professional liability insurance for all industry types
Professional liability insurance is one way that these professionals can cover the legal expenses. This type of insurance is how professionals such as dietitians, architects, engineers, consultants, and others can stay protected against the biggest risks in their industry.
Visit bizinsure.com to know more about the different types of industries that are covered by professional liability insurance. Whether you are a consultant, architect, designer or an engineer, professional liability insurance gives you a peace of mind and the protection you need.
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