Even if they don’t make a mistake, professionals in all fields are exposed to malpractice charges.
Malpractice is when a professional makes a mistake. Customers, clients, and patients might expect you to have a particular degree of competence in your field of work if you are a professional – someone who is competent or who has gotten specific training to accomplish a job.
In other words, professionals should be aware of the consequences of making certain errors when doing their duties. A dentist, for example, is required to be able to see a broken tooth and provide treatment recommendations. A new police station should be designed without structural problems by an architect. A lawyer is also required to give clients with competent legal advice.
Professionals of all colors might be held accountable (liable) for offering less-than-stellar services as a result of this expectation. When someone outside of your company believes you’ve done anything wrong, they might file a claim against you in order to collect their losses.
Malpractice lawsuits, however, aren’t usually that straightforward. Continue reading to find out how malpractice may harm your company, even if you never make a mistake.
Malpractice lawsuits aren’t only for doctors and nurses.
Most of us think of healthcare professionals when we hear the term malpractice, presumably because such instances get a lot of media attention. Almost every small company owner who offers professional services, however, may be accused of malpractice — it simply won’t be labeled that.
Different sectors use different phrases to describe misconduct, but the following concepts are broadly equivalent:
Malpractice. Cases involving doctors, attorneys, and government officials are usually referred to as “medical malpractice.” (For a real-life example, see our blog “Liability difficulties for therapists who provide distance treatment.”)
Errors and omissions are common. This phrase is more often used in industries that require technical or quantitative skill, such as accounting.
Liability as a professional. This may be the most often used word when referring to professional mistakes. Some sectors may use a more specialized phrase for “professional,” such as photographer’s responsibility.
Fortunately, Professional Liability Insurance has been developed to protect all types of professionals against the high costs of service-related claims. Consider the following scenarios that might result in a professional responsibility claim:
Professional standards have been broken. Assume a veterinarian is accused of misdiagnosing the condition of a sick dog. To collect the expense of the pup’s pricey treatment, the pet owner might sue the veterinarian for negligence.
It was just a case of carelessness. Human mistakes – the sort that may happen to anybody – are the subject of this kind of professional responsibility lawsuit. Let’s assume the dog slips his leash when the vet’s assistant lets him out, races across the road, and is struck by a vehicle. The pet owner might accuse the veterinarian of carelessness and file a lawsuit as a result.
Errors and omissions are common. Assume a tax expert makes a little mathematical mistake that costs her client a significant amount of money. A claim for mistakes and omissions against the tax expert might be filed by the customer.
Contractual breaches. If a corporation or customer believes you have failed to satisfy your professional commitments, you may be sued.
Unfavorable consequences. In general, you may be sued if a client or customer is dissatisfied with the outcome of your service. A lawyer, for example, might be sued for legal malpractice if a client is unhappy that they did not win a lawsuit.
Even if you don’t make a mistake, E&O claims are costly.
Even if their work is flawless, small company owners might be sued for mistakes and omissions / professional responsibility claims. This is because many of these claims are caused by reasons outside your control, such as a client’s:
- Unmet expectations (which might indicate he’ll never be content)
- Misunderstanding of a profession’s limits on a fundamental level
- Misunderstandings that may occur as a result of a client’s failure to read a contract
- You can’t reason with personality faults.
You may imagine that allegations arising from these problems wouldn’t stand up in court – if they ever got there at all. However, for the vast majority of small company owners, this is irrelevant. Even if they never go to court, they will need to engage a lawyer for legal advice as soon as the official complaint or lawsuit comes, which may cost thousands of dollars.
In legalese, professional responsibility is referred to as “tort liability,” which refers to civil wrongdoing (as opposed to criminal wrongs). Small firms are not immune to costly settlements or verdicts just because they lack substantial funds. Small enterprises, in reality, are often burdened with the bulk of liability expenses.
Small firms borne 81 percent of America’s $105.4 billion in tort liability costs in 2008, according to the U.S. Chamber Institute of Legal Reform’s Tort Liability Costs for Small Businesses study, although accounting for just 22 percent of sales. Take a look at some of the other incredible statistics:
Medical malpractice expenses for small-practice physicians total $28 billion each year. (For an expensive, real-world example, see our blog entry “Pharmacist held responsible for $1.44 million in HIPPA professional liability case.”)
Annual tort liability expenses for small enterprises with less than $1 million in sales are $74.8 billion.
The percentage of small company owners who have had a lawsuit filed against them in the previous ten years is 34 percent.
An average “frivolous litigation” that never gets it to court costs between $2,000 and $5,000.
The cost of litigation in the instances analyzed by the Small Business Administration varied from $3,000 to $150,000, with just one-third of those cases costing less than $10,000, according to a 2005 analysis.
How to defend your company against malpractice and professional liability claims
By include professional liability insurance in their company protection plans, small business owners may shield their companies from the exorbitant costs of malpractice litigation. Contact one of our insurance professionals to learn more about this policy.
Explore more interesting & insightful articles at ZoomBazi
