What do accountants, attorneys, advocates, medical specialists, estate agents, teachers and engineers have in common?  They are all at risk of being held liable for something going wrong. That’s right. In fact, anyone who offers a service in a specialised field can legitimately and legally be held accountable when worst comes to worst.

What is liability insurance?

Forming part of a greater general insurance policy, liability insurance offers coverage for allegations against you or your business arising as a result of claims of negligence or inappropriate action on your part leading to someone being injured or to the damage or loss of someone else’s property.

Wikipedia defines professional liability insurance, a common derivative form of liability insurance, as “a form of liability insurance that helps protect professional advice- and service-providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit.” In other words, the liability insurance policyholder is protected by their insurance cover that will pay out (either partially or fully) in the event of a claim.

What does it cover?

Besides general negligence leading to injury or the damage of property, liability insurance policies generally cover:

  • Claims of fraud and dishonesty
  • Claims of defamation/verbal abuse
  • Claims of breaking confidentiality
  • Claims of purposefully misleading clients or patients
  • Unintentional infringement of intellectual property
  • Unintentional breach in contracts

Can you be held accountable?

The sad truth is that most skilled professionals, and even entrepreneurs, are at risk of being charged with negligence (or any of the above claims).  Whether founded on fact or not, such claims can come at a great emotional and professional cost.  The last thing you want to worry about is the financial cost. That’s what makes professional liability insurance so great – you can have peace of mind that even if someone does accuse you of any funny business, you have the financial backing to prove your innocence and regain your reputation.

Establishing whether you need professional liability cover

There’s a case to be made for not being too frugal when it comes to taking out any type of insurance. Ultimately you want to be protected just in case anything ‘hits the fan’ (you know what we mean). But at the end of the day, deciding whether or not you need professional liability insurance is completely up to you.  You are the one that knows your professional or business environment, industry and clients best, so only you can estimate how plausible it is for someone to hold you liable.