The act of doing business in today’s often-litigious environment is no small task. Many services offered come with a variety of exposures and, even someone who carries insurance may find that their policy doesn’t cover them for certain allegations regarding the type of service they perform. Businesses need to assess risk based on the type of work they do, the clients they take on, and how well their written contracts shield the business from this type of lawsuit.
Coverage is a no-brainer for many individuals or groups who, after leaving their former company, decide to apply their expertise in a particular area and open a consulting business. The consultant firm and its employees provide a service or offer advice. There may come a time when a client is dissatisfied with the results, even claims that damages were a result of bad advice or a faulty repair.
Consultants professional liability coverage, also called errors and omissions insurance, may be necessary in this case (in addition to any general liability policy) to protect the accused in the event that a client decides to sue, claiming that they were the victim of a sizeable financial loss or interruption of services. The tech industry is particularly susceptible because technologies are still so new: The laws are still being defined and reshaped, so there really is no clear standard on what constitutes acceptable and reasonable client expectations in this area.
Why additional coverage is often needed
While most companies may have a general liability policy (CGL), that often is not enough. This is due, in part, to some exclusions that exist. Intentional injury, for one, is excluded, but when an insured acts in self-defense, there is generally coverage. For example, if a disgruntled employee or an intruder were about to cause bodily harm to someone and an insured individual picks up an instrument striking the person and the attacker is injured, that should be a covered offense (but not if the insured intended to inflict malicious injury).
Insurance is one of the areas where companies may try to cut costs, but no consultancy should go without both, consultants professional liability and a CGL policy. Insuring professional firms often poses challenges for insurance agents. To protect the business, an agent needs to evaluate all the exposures the business faces. In that way they can offer solid coverage solutions that can close gaps between policies and avoid coverage issues should a claim ever arise.