Malpractice is a professional error, omission, or act of negligence in performing a professional act. Malpractice is also, a term used to denote the type of professional liability insurance coverage written to cover physicians, surgeons, accountants, lawyers, architects, and engineers, among others.
Malpratice Insurance Explained
Professional liability insurance or malpractice insurance is a type of liability coverage designed to protect traditional professionals (e.g., accountants, attorneys) and quasi-professionals (e.g., real estate brokers, consultants) against liability incurred as a result of errors and omissions in performing their professional services. Although there are a few exceptions (e.g., physicians, architects, and engineers), most professional liability policies only cover economic or financial losses suffered by third parties, as opposed to bodily injury (BI) and property damage (PD) claims. This is because the latter two types of loss are typically covered under commercial general liability (CGL) policies. The vast majority of professional liability policies are written with claims-made coverage triggers. In addition, professional liability policies contain what are known as “shrinking limits,” meaning that unlike CGL policies (where defense costs are paid in addition to policy limits), the insurer’s payment of defense costs reduces available policy limits. Accordingly, when attempting to determine appropriate policy limits, insureds must consider the fact that because defense costs are often a high proportion of any claim settlement or judgment, they must usually purchase additional limits. The most common exclusions in professional liability policy forms are for BI, PD, and intentional/dishonest acts.
To learn more about protecting you and/or your organization from malpractice suits and/or professional liability / Errors & Omissions (E&O) insurance speak to an ALIGNED Insurance Advocate of connect with us at www.alignedinsuranceinc.com
More About ALIGNED Insurance
ALIGNED is a premiere insurance brokerage that was exclusively and uniquely built to create, negotiate and deliver the best business insurance and risk management strategies/solutions to small, medium and large organizations across all industries. ALIGNED’s primary mission is to protect the cash flow, profitability and balance sheets of their clients from the chance of unforeseeable losses.