Professional liability insurance helps protect professionals and their companies against claims related to services offered. These claims typically point to negligence or errors and omissions in advice or services that ended up creating problems for the client, especially if it manifests in financial harm. To protect against these claims and major financial-related problems, opting for Professional liability insurance can offer the right level of protection.
However, not all professional liability policies are created equally and some come with certain exclusions that can end up creating a gap in coverage for professionals in certain situations.
Here are some exclusions to professional liability insurance to look out for in order to avoid major financial, professional, and reputational problems.
Discrimination
Professional liability policies won’t cover any matter arising out of actual or alleged discrimination. This exclusion is applied to a liability policy as an employer or in any other capacity as well as any obligation to share damages with someone else who has to pay damages.
Professional liability also won’t cover a situation borne out of the inability or failure to collect or pay money. This includes fee disputes and third party reimbursement disagreements.
Physical or Sexual Abuse
In recent years, viral social media followings such as #MeToo and #YesAllWomen have encouraged a focus on sexual assault and harassment in the workplace. There’s been an increasing number of related allegations in many different industries, holding those guilty—mostly executives and supervisors—accountable.
The past few years of cases around sexual abuse in the workplace have also highlighted a major gap in professional liability insurance policies. Currently, allegations related to sexual assault and physical abuse are not covered by professional liability insurance. However, if the claim is unfounded, and the insured does not admit any guilt, the insurance carrier will usually offer defense coverage.
Employing and Terminating
Professional liability policies don’t cover anything arising out of any claim made by someone because of refusal to employ that person. Also, it doesn’t cover the termination of someone’s employment or employment-related policies, practices, acts, or omissions. These omissions can include such instances as sexual harassment, as mentioned above, defamation, discipline, humiliation, or demotion.
A professional liability insurance policy should not be treated as a blanket policy that protects every situation at every level. It’s important to know what is covered and what isn’t in a policy in order to get out ahead of certain liabilities. While it, of course, helps to avoid the scenarios listed above through personal and professional education that can be applied to everyday work, it does help to know which areas will need more support if allegations are brought up.
