Most people have insurance for their home, car, pool, life and even the family dog. However, one area that many overlook is the protection of professional coverage. Every day people in technical, professional, and managerial roles make decisions that could come back to bite. These actions, or lack of action in some cases, can be brought up in legal matters. Even if the person is entirely innocent or uninvolved, just being dragged into litigation can be painful, expensive and debilitating. While no one in modern society can avoid being sued, a person can protect himself financially with professional liability protection.
The Great Myth of Company Protection
Most people assume that if they get sued in the course of doing a job or at work, the company they work for will pay for the necessary legal representation. This half-truth is based on the concept of vicarious liability, a legal term that generally states a company or business is responsible for the actions of its employees when they act in their job capacity. The problem with this assumption is that many workers think the company will hire attorneys to protect them as individuals. This is a fallacy. The employer will often hire legal representation, true, but those attorneys are in place to protect the company, not the individual workers. That means information about the individual, settlements involving the person and his or her actions, and potential criminal actions will be separated from the company where possible, usually leaving the employee hanging out in the cold.
Workers are also often put in a bad spot when being represented by company counsel. For the company attorney to understand how best to settle or defend the company, he often needs to hear all information possible. The company itself rarely gets charged with criminal charges. It’s far more effective for suing parties to go after civil penalties and make the company pay money.
However, individuals can be and often are charged with criminal charges for bad business actions where a case can be made. When a worker is expected to provide full information that could implicate him in a criminal charge, but will be fired if he doesn’t cooperate with depositions and questions, the worker ends up being in a double-jeopardy situation. His cooperation could literally provide the information to help a criminal case after the civil trial, right or wrong.
Another myth many employees fall for is the idea that the legal services benefit some employers provide will help with getting sued while on the job. In fact, these services are pretty much just a referral business. Employees pay maybe $10 or $20 a month for the benefit as a group plan with an employer, and then the plan is supposed to give them a referral to a representing attorney. What many find out the hard way is that the fees paid get a basic consultation and maybe an hour or two of talking with an attorney for advice. After that, the worker has to pay out of pocket for any serious representation. Again, many find out this reality when they are already in trouble and being sued.
Professional Liability Coverage
For those who work in professional positions, such as doctors, attorneys, engineers, scientists and so forth, professional liability coverage provide financial protection that helps pay for legal representation in the case of being sued. These kinds of plans are often used by both high level licensed individuals in a company as well as professionals who work independently. In many cases the coverage only works for civil litigation, but in many cases the work of such positions is often sued on the basis of negligence, omissions, loss of income and similar. The typical basis for legal recovery tends to be civil court.
Where people are creating a product or service that people rely on and, if done wrong, could harm them, professional liability coverage also plays a key role in financial protection. Engineers and doctors frequently find themselves in this position, with every service they perform expected to be perfect given their training and licensing. Unfortunately, humans are imperfect and sometimes make mistakes. Liability coverage insurance helps fend off lawsuits that would otherwise bankrupt a person.
Management Insurance
Unlike professional liability insurance, management insurance is designed to protect general directors, executive officers and managers from a variety of claims and charges that can occur in the course of their work. There are differences, however, depending on the type of company the person works for. As a result, it’s important to understand the extent of coverage provided for a person’s specific employer versus comparing with others. Such plans often provide:
• Executive liability coverage for civil legal protection in private and non-profit entities.
• Protection for labor and employment activities in private and non-profit companies.
• Fiduciary and due diligence protection for managers in public, private and non-profit companies.
• Miscellaneous professional liability as well as errors & omissions coverage for positions working in banking, legal, real estate and accounting businesses or entities.
• Legal representation for criminal charges when working in public, private and non-profit entities.
• Protection for manager’s liabilities in smaller community banking or credit unions, insurance businesses, financial advising, and savings entities.
This type of insurance can either be paid for by an employer or an employee. While letting an employer provide the coverage can save a person money, the employer can always cancel the policy if the entity believes the employee is too much of a liability for the business. If the plan is paid for by the employee, that sort of risk won’t occur.
Caveats
For those who want to obtain professional liability insurance coverage, it’s important to remember that such policies are not a default protection to all civil lawsuits and charges. Often, insurance providers will include long lists of civil complaints they won’t cover as well as limit how much coverage is provided under different circumstances. It’s very important for a consumer to carefully read a proposed policy well ahead of agreeing or signing anything. Not understanding what protections will be provided and to what extent can create a lot of misconceptions at the time when legal help is needed the most.
Some insurance providers will be very cooperative at the time of signing, indicating or implying all sorts of issues will be addressed with coverage. Nothing that is verbally stated in a sales situation matters unless it is blatant fraud, which is rare and hard to prove. At the time of coverage need, all that will matter is what was printed in the insurance policy and signed by both parties.
