Most professionals can benefit from having a professional liability insurance policy in place, but not all professionals need the same type of policy. Insurers offer several kinds of professional liability policies so that they can meet the unique insurance needs of professionals in different fields. Here are four of the most common types of policies.
1. Medical Malpractice Policies
Medical malpractice policies are a type of specialized professional liability insurance that’s designed for people who work in clinical medicine. Doctors are often legally required to carry these policies, but they aren’t just for doctors. Physician’s assistants, nurses, paramedics, emergency medical technicians, and anyone else who provides treatment may want a policy.
These policies help pay legal fees, judgments, and settlements associated with covered lawsuits that are filed by patients. Because such lawsuits can be expensive, policies typically have high limits.
Because these policies are specifically crafted to provide coverage for mistakes made when treating patients, they’re not purchased by professionals outside the medical field.
2. Legal Malpractice Policies
Legal malpractice policies perform the same function for legal professionals as medical malpractice policies do for medical professionals. Legal policies offer protection against lawsuits filed by clients over mistakes that are made when conducting legal work.
The coverage of these policies differs from medical policies, though because legal work is different from medical treatment. Legal policies cover mistakes made when providing legal advice to clients, as well as work done as a title agent, notary public, director, trustee, or executor. Medical professionals don’t take on these roles, so such coverage isn’t included in medical policies.
Legal malpractice policies are purchased by lawyers, paralegals, and others who work in legal professions.
3. E&O Policies
Errors and omissions policies are commonly referred to as E&O policies within the insurance industry.
These policies comprise the broadest category of professional liability insurance, and they’re used by many different professionals. Almost anyone who provides advice while working and doesn’t have a more specialized policy (e.g. medical or legal malpractice policy) may need an E&O policy. This includes:
- Investment advisors
- Insurance agents
- Real estate agents and brokers
All of these people offer advice in some way. For example, accountants provide tax advice, and real estate agents make home pricing recommendations. Architects often make suggestions on building designs and functionality.
Even professionals who don’t primarily offer advice but make recommendations to customers once in a while might need an E&O policy. For instance, landscapers primarily perform manual work beautifying yards. They sometimes give advice on what plants to put in and how to grade slopes, though, and they may need this type of coverage in case some advice turns out to be wrong.
E&O policies aren’t as specialized as the other forms of professional liability insurance, but they can be tweaked slightly to suit a specific professional’s situation. Policies have various protections, deductibles, and limits that professionals can choose.
4. D&O Policies
D&O is shorthand for directors and officers policies. This is another type of specialized coverage specifically for leaders of businesses, nonprofits, and other organizations.
Directors and officers are often held to a higher standard than average employees because the leaders have an oversized role in how their organizations perform. Should they make a mistake in their leadership decisions, they might be held financially accountable for the fallout. D&O policies cover errors that directors and officers could make.
D&O policies are normally bought by organizations. Organizations pay for the policies because leaders are only exposed to the risks by taking on a leadership role. If they didn’t become a director or officer, they wouldn’t need the coverage.
For help finding the right type of professional liability insurance, contact the Lanham Agency.