Professional Liability Insurance for Defense Costs & Much More
Our industry sees professional liability claims every day from clients who allege negligence or an error or omissions as a result of work performed. From medical malpractice lawsuits to E&O claims filed against architects and engineers, attorneys, property managers, and others, today’s business landscape is dotted with litigation. And even those companies that employ best practices and implement risk management protocols are vulnerable to suits claiming damages as a result of their professional services. What’s more, we know that even though an allegation can be without merit, it needs to be defended, which can result in significant costs for businesses.
A couple of examples of professional liability suits include:
A commercial building owner hired a property manager to manage a facility. The building’s roof had an ongoing leak that caused substantial damage to tenant property. The building owner was sued to recover the value of the damaged property, and several tenants legally terminated their lease agreements. The building owner sued the property manager, alleging negligence for failing to maintain the roof and to repair the leaks in a timely manner. Damages sought included lost lease income. The case settled for more than $200,000, with the property manager incurring incurred defense costs that exceeded $50,000.
A distributor of auto parts hired a management consultant to assist the organization with
staffing, budgets, and executive decision-making. The consultant put into a place a reorganization strategy that redefined management roles and delegation, initiated spending controls, and used a new staffing model to address the organization’s needs. Eighteen months after the reorganization, however, the client alleged that the spending control solution and staffing model had a negative impact on its bottom line when the expense of hiring and training new employees was taken into account. The client sued the management consultant for negligence in rendering a flawed solution to its problem, seeking compensatory damages including, but not limited to, lost profits. The case settled for nearly $150,000 with defense costs surpassing $75,000.
In both of these cases, just defending the cases cost the defendants substantial financial resources. With the proper professional liability coverage, insurance will kick in to pay for the cost of legal costs and the judgments up to the policy limits. What’s more, depending on the type of policy, an insured can choose to obtain prior acts coverage, which insures specified work done before obtaining the new policy. Other policies offer an extended reporting period, which offers protection into the future, even after an individual retires.
At Caitlin-Morgan, we can discuss the various professional E&O liability plans we have available and how we can help you secure the right policy for your clients, depending on their professions and their needs. Give us a call at 877.226.1027.