Professional Liability Claim Scenarios

If your business provides a service, then there is always a chance that you could face a claim for professional liability. If you don’t have insurance, then that claim stemming from a simple mistake could lead to financial ruin. Even if you are successful in your defense, being sued carries an immense financial burden. You have to pay for attorneys and witnesses, and cases can drag on for years and stay hanging over your head. Having coverage is the best financial choice and for your own state of mind.

Professional liability coverage is what you need to protect against claims that something your business has done has caused a loss for a client. Of course, it won’t help you if you’ve done something maliciously, but if an error or missed deadline, for example, harmed a client, you can get compensation to help with legal expenses, settlements, and with any awards that are paid out to the client. It can be tricky to figure out what constitutes professional liability, so here are some possible liability claim scenarios to help clarify it.

Accountant

Source: wilmington.edu

When you have input into how someone else runs their finances, there are always possibilities to cause them harm. It’s a big responsibility, but the fact is, mistakes can happen. For example, an account is charged with properly setting up companies and projects in a financially beneficial way to the client. Let’s say, for example, that an accounting company is setting up some real estate investment properties. However, when registering them, the company created to make the investments was set up as a corporation when it was supposed to be a partnership. This could have severe tax implications for the client, and they could make a claim against the accountant for hundreds of thousands of dollars.

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Attorney

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People and businesses hire attorneys to help them with legal situations. Unfortunately, mistakes can have terrible consequences that can affect clients’ lives forever. Let’s say that an attorney has been hired in a slam-dunk personal injury case. The client is seeking compensation for medical bills, lost wages, and pain and suffering. However, because the case seems so easy, the attorney neglects it, and eventually files some important paperwork past a deadline. As a result, the client does not win their case and must pay out of pocket for their high medical expenses. The attorney should face a professional liability claim for this error.

Engineering Firm

Source: growthforce.com

Engineering firms are responsible for ensuring that the plans for new buildings and renovations are structurally sound. As an example, an engineering firm might hire an architect to determine where it is safe to dig to build the foundation for an addition to a commercial lot. However, when the contractor went into the ground, they hit a water main that caused delays to the project, potentially costing the client a lot of money. On top of that, the escaping water could damage any nearby businesses, forcing them to close or cancel projects of their own. The firm, as well as the architect, could be on the hook for repaying the resulting costs to the client and to the affected businesses. If they had purchased insurance here, then they would be covered to repay those costs.

Physician or Healthcare Professional

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When it comes to the healthcare industry, professional liability is known as medical malpractice. All healthcare facilities, doctors, and nurses should have medical malpractice coverage. A common example of a claim involves missed diagnoses or failing to act on a patient’s concerns. For example, patients could visit their physician over a period of years and express concern about certain symptoms. The doctor may dismiss those concerns, believing the issue to be minor or psychosomatic. However, it turns out that those symptoms were signs of something very serious. As a result, the patient had to miss work, had massive medical bills, and their health was compromised. They could then make a medical malpractice claim to recoup those costs and get compensation for pain and suffering.

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Software Developer

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A business needs a new solution for tracking employee hours and paying them out accurately. They hire a software developer who does the work and helps them implement a new timekeeping and payroll system. However, even though it is custom-made for the client, it records information wrong and fails to pay employees correctly. The company then has to make amends to their staff as well as purchase an entirely new software solution to replace the one that did not work. They then make a professional liability claim against the developer to recover those costs.

Personal Trainer

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The job of a personal trainer is to help people get and stay in shape and to lead healthier lives. However, when you are providing advice and guidance about other people’s bodies, you have a responsibility to protect their health and safety. As an example, a personal trainer might take a client through a rigorous workout. The next day, the client has a very sore back. It turns out that they have developed a serious back issue that requires missing work, medical treatments and surgeries, and physical rehabilitation. The client can make a claim against the trainer to receive compensation for those costs, since the trainer did not provide appropriate exercises for the client’s physical condition.

Real Estate

Source: forbes.com

A real estate agent must ensure all the details are in place when they make a deal. This is especially important in commercial and large-scale real estate deals. For example, when negotiating a deal, the agent might ask for documentation from the seller that confirms the building complies with all accessibility regulations. The seller obliges, and the sale goes through. However, it turns out that the report provided to the agent was out of date, and the buyer ended up having to make expensive upgrades to get the building up to code. The real estate agent and the buyer’s representatives could face professional liability claims as a result.

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You might be the very best at what you do, but mistakes can happen, and you could get sued. Whether it’s you or an employee, your business can be on the hook for major costs related to your error that led to a client loss. So protect your business by investing in professional liability coverage so that one mistake won’t sink your business.