What do you, as a business person who provides professional advice for a living, have to do incorrectly to trigger a lawsuit that could result in substantial, even catastrophic, professional liability insurance costs? The grim answer: absolutely nothing. A disgruntled client can file a suit claiming negligence, errors, or omissions in the course of the professional services you rendered that resulted in financial damage or loss. Whether the mistakes actually occurred or not may be battled out on the courtroom floor-yet even if, at the end of the day, you are cleared of any wrongdoing, the damage has been done, in more ways than one. Unfortunately, this kind of business nightmare is not all that unusual; studies show that each year, the number of claims of this sort has continued to rise with no signs of stopping.
Costs can be more than just financial
Certainly, a great deal of money may need to be spent for your defense, even in a meritless suit. In fact, one major insurer found that the majority of the expenses involving these types of suits are to pay for legal defense fees, and a malpractice suit can ultimately cost hundreds of thousands into the millions of dollars to settle. If that’s not bad enough, consider some of the intangible damages:
Your reputation is at risk
You have likely spent years, perhaps even decades, building a solid, respected name in your community. The trust you’ve worked hard to earn reflecting professionalism, expertise and an excellent history of satisfied customers can be undone by a single high-profile malpractice claim. Your name can be dissected, discussed, and your actions tried in a court of public opinion; these days, social media and various online sites give people a platform to air their judgments as they please. If a review is particularly scathing or the details of the case are deemed “juicy,” the information can be reposted infinitely, gaining momentum and finding its way to mainstream media eventually.
Your health is at stake
Edward is an architect with years of experience in the business, who nevertheless found himself facing a suit alleging a multimillion-dollar home he designed had a major structural flaw that resulted in a partial collapse of a cantilevered deck, costing hundreds of thousands of dollars to correct. Ed was genuinely distressed about the error; he lost weight, lost sleep, and worried so much about the case that he suffered a near-fatal heart attack the night before the case was to be heard in court. Bottom line: some costs just can’t be totaled.
Regardless of your line of work, speak to an experienced insurance agent about professional liability insurance costs; you’ll find out that premiums are the least of what the potential price could be, and the protection they provide will make this money well spent.