Real-World Cases and Lessons Learned On 5 Professional Liability Claims. Stay with us and learn more.
For companies offering specialized services, professional liability insurance is crucial because it guards against allegations of carelessness, mistakes, or omissions.
Nonetheless, knowing how this coverage functions in practical situations might provide insightful information. Five real professional liability claims will be examined in this essay, along with the events leading up to each case and the lessons discovered.
Real-World Cases and Lessons Learned On 5 Professional Liability Claims.
These examples will demonstrate the value of comprehensive coverage and the possible hazards that businesses face in the absence of adequate protection, regardless of your profession—consultant, attorney, or accountant.
Read also: Essential Tips for Small Businesses to Save Money on Business Insurance
Real-World Cases and Lessons Learned On 5 Professional Liability Claims
Liability lawsuits are a common issue in many industries in today’s work environment.
For companies of all sizes, professional liability insurance—also known as errors and omissions (E&O) insurance—is essential.
Professional liability insurance is crucial if you provide services or advise in industries like consulting, real estate, technology, or law. When customers claim that your deeds, mistakes, or carelessness have cost them money, this kind of insurance acts as a buffer.
Professional liability insurance can lessen the financial and time burden of defending against false accusations, even if they are unjustified. Real-World Cases and Lessons Learned On 5 Professional Liability Claims.
Here are some actual instances of professional liability claims from a variety of industries to highlight the significance of this coverage:
Claims for Legal Professional Liability
There will undoubtedly be occasions when you must defend yourself as an attorney, even though you may spend the most of your time defending others. Professional liability insurance comes into its own at that point.
For example, when Steven Call was representing the State Bank of Southern Utah, he missed a significant filing deadline by sixteen minutes. In the case, which involved a $237,000 loan and a bankrupt borrower, a complaint had to be submitted by midnight.
However, because of a technical glitch, Call submitted it at 12:16 AM. After the Denver Appeals Court’s decision against him, his client, the bank, may file a claim for procedural errors. This instance demonstrates how, in the absence of adequate coverage, an apparently little error can have serious consequences.
Real-World Cases and Lessons Learned On 5 Professional Liability Claims.
Claims for Professional Liability in Technology
Professional liability problems are nothing new to the tech sector, particularly as the use of digital solutions and artificial intelligence keeps increasing.
Hertz sued Accenture in 2019 after the company failed to create a working website despite spending $32 million. Missed deadlines, cost overruns, and an unsatisfactory final product plagued the project. Even though the action was eventually dismissed by the court, Accenture’s reputation was harmed and they had to pay for an expensive legal defense.
Regardless of the case’s outcome, the legal fees alone might have forced them out of business if they hadn’t had enough insurance.
Claims for Professional Liability in Accounting
Because accountants deal with sensitive financial data, even the smallest error can have serious repercussions for their clients. Professional liability insurance is therefore extremely important in the accounting sector.
In one instance, over a number of years, an accountant prepared tax returns for a contractor. After an examination found that the contractor had neglected to pay use taxes on goods bought out of state, they were hit with a $100,000 tax obligation. The accountant was sued by the contractor, who said they were not told to pay the tax.
The matter was resolved for $50,000, despite the accountant’s argument that their responsibilities were restricted to filing taxes and providing little guidance. This illustration highlights the possible consequences of even seemingly insignificant mistakes in financial advising.
Real-World Cases and Lessons Learned On 5 Professional Liability Claims.
Claims for Professional Liability in Real Estate
Real estate brokers deal with special difficulties, especially when assisting customers in making important choices. In this sector, mistakes might result in serious liability claims.
In one Texas example, the buyer of a flipped house had a terrible accident when their son fell through faulty flooring, leading to a lawsuit against the agent. The buyer filed a lawsuit against the real estate agent and other parties for not disclosing the subflooring problem.
The agent still had to deal with the legal defense and possible expenses even though Texas law does not compel real estate agents to perform independent inspections. This example demonstrates how agents may be subject to legal action without adequate insurance protection, even in cases where they are not at fault.
Examining Claims for Professional Liability
Professional liability insurance might be a lifesaver for consultants in the event that they are sued for giving clients advice.
In one instance, a couple’s investment portfolio was managed by a financial advisor. The husband made the decision to day trade and sell certain equities, which resulted in large losses. The widow sued the advisor for poor management after the husband died and the market continued to fall.
Due of the possibility of jury sympathy for the widow, the case was settled for $200,000 even though an inquiry revealed no misconduct. Even in circumstances where the adviser operated within their professional bounds, this example demonstrates the possibility of large compensation in professional liability suits.
Important Takeaways
Any profession might have mistakes and accusations, and handling allegations of malpractice or incompetence may not always depend on your guilt. Having the appropriate professional liability insurance is essential for safeguarding your money and reputation.
Although nobody expects to have to deal with such claims, having the right insurance in place can help a lot in the worst case scenario.
Real-World Cases and Lessons Learned On 5 Professional Liability Claims.
