Professional liability policies insure different exposures than are covered under the Commercial General Liability Policy. The focus of professional liability policies is to provide payment for damages arising out of the rendering or failure to render professional services. A professional is someone who possesses or claims to possess the special knowledge and skill necessary to render a professional service. When that knowledge or skill is deficient and financial or other injury results, a claim for damages may be initiated against the professional.
Categories of Professionals
Generally, professionals fall into the following two categories:
- Those who administer health care or other professional medical services. Included in this group of professionals are physicians, surgeons, dentists,laboratory and x-ray technicians,veterinarians, druggists (store owners), pharmacists (employed), chiropodists, chiropractors, opticians and optometrists, nurses, dental hygienists and
beauticians. Hospitals and other medical institutions also have a professional liability exposure. Malpractice Insurance can be purchased to provide needed coverages.
- Those who give advice and or a service. This group of professionals includes lawyers, accountants, architects, engineers, marketing agencies, home care workers and real estate and insurance agents and brokers to name a few, basically anyone who has selected a vocation that requires training or some special knowledge can be considered a Professional. Professionals having this exposure can purchase an Errors and Omissions Insurance policy. The subject of the attached video.
Basis of Legal Action
A claim for damages can be commenced in tort or in contract.
a) Action in Tort
Professionals such as physicians, lawyers, engineers and insurance and real estate brokers are required in law to exercise a higher standard of duty of care than are persons not having such knowledge and skill. The level of the duty of care can vary between those of the same profession. For example, an articling law student is not expected to have the same knowledge and skill, as would a senior law partner. When a client pays for and relies on professional services or advice and it turns out to be wrong, the question arises of whether such services and advice were given with sufficient care and skill. An increase in public awareness and expectations, coupled with a deterioration in professional relationships, has resulted in increased litigations, more findings for the plaintiff, and higher awards for damages.
b) Action in Contract
When professional services are purchased, there is a promise made, whether expressly stated or not, that they will be performed with due care. This means that care will be taken to ensure that all essential steps are followed and that no steps are omitted. A legal action commenced on the basis of breach of contract will be successful when the plaintiff can show that the professional failed to perform at the required level.
There are three recognized levels of performance:
i) Complete or satisfactory performance. In this instance, the level of performance meets accepted standards. In meeting this standard, the professional is entitled to the
ii) Substantial performance. Substantial performance falls short of complete performance only in minor respects. It entitles the professional to the contract price, less any damages the client may have incurred in not receiving complete performance.
iii) Material breach. A material breach occurs when the professional's performance is grossly inadequate or defective in some major respect.
Society in general has become more aware of their legal and contractual rights. Rightly or wrongly , many believe that legal action should be initiated from any turn of events that deviate from the expected outcome. Errors and Omissions insurance protects both the professional and his/her client. In a verifiable case where a client has suffered damages it provides the financial resources to compensate the injured person(s) or company. It is also designed to provide a defense for the professional against frivolous allegations of negligence or wrongdoing by the person(s) or company thereby protecting the professionals assets. Please watch the short video on Miscellaneous Professional Liability from Travelers Canada to gain more insights into this important coverage.
Contact Peake & McInnis Insurance Today!
If you would like more information on Professional Liability Insurance, you can reach Peake & McInnis Insurance at 1-902-566-5534.