How to Protect Your Business or Profession From Negligence Claims

For small businesses or independent professionals offering advice and services to their clients in any industry, there always exists a risk of disputes with a client, which can lead to an expensive lawsuit and damage to your reputation, even if you’re not at fault. You need to avoid that predicament at all costs. 

Professional liability insurance is not just a necessity, it’s a shield that can protect your business and your professional reputation. It’s there to cover your costs if an allegation, claim, or lawsuit related to professional negligence hits you, giving you the peace of mind you need to focus on your work.

Let’s go over what professional negligence is and the steps you can take to prevent misunderstandings and disagreements that can lead to a claim against you.

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What Is Professional Negligence?

Professional negligence is defined as when a professional fails to apply the required standard of care or fulfill their obligations in executing their services, which results in a client suffering a financial or physical loss. 

For example, if an accountant prepares financial documents for a client that contain errors or omissions, and those mistakes lead to a client suffering an economic loss, you may be sued and required to compensate the affected client for the harm or financial losses caused.

10 Ways to Minimize the Risk of Professional Negligence Claims

Here are 10 steps to take to try to minimize a misunderstanding between your company and clients and avoid a professional negligence claim against you:

1. Create detailed contracts for clients to sign

Ensure you provide every client with an in-depth contract to sign that outlines the scope of the project, applicable deadlines, and the costs involved at each stage. We recommend you hire a lawyer to review and assist with drafting your client contracts.

2. Keep your clients in the loop

Communication is invaluable, so don’t keep your clients guessing what may or may not happen and when. Keep them in the loop by informing them of progress and the timing of your deliverables. Get their feedback and answer any questions promptly. If unexpected issues arise, tell them and explain why.

3. Ensure employees are trained experts

Ensure your employees are trained experts and supervise and review their work throughout each project phase. Doing so can help identify mistakes or oversights and meet your contractual obligations.

4. Include deadlines and milestones in your projects

As part of your client contract, include the deadlines and milestones of each project to highlight interim goals and provide status updates toward the completion deadline date. 

5. Protect your clients’ data

Robust cybersecurity is critical for any business or independent professional to protect the integrity and security of client data. A data breach or cyber-attack that compromises data and puts your clients at risk can lead to expensive damage claims or lawsuits against you.

6. Adhere to laws and industry regulations

Complying with federal and provincial laws is vital, as is ensuring industry regulations are respected and followed. Being up-to-date on your profession’s or industry’s recommended best practices can serve to thwart being caught off-guard and lead to significant problems.

7. Get professional liability insurance

Get a comprehensive professional liability insurance policy to protect your finances and help you deal with a professional negligence claim. Also called errors and omissions (E&O) insurance or malpractice insurance for health and wellness professionals, it covers your professional services and media and advertising services if one of your clients is sued for defamation. 

8. Have a quality assurance process in place

A thorough quality assurance process that involves more than one individual reviewing vital documents or materials for your client is essential to catching mistakes or subpar work before your clients do. 

9. Implement a defined schedule of payments

You have to get paid for your services. Enforce billing practices that outline a schedule of payments, so your clients are aware in advance of what they’re required to pay and by when. That can help prevent disagreements over money.

10. Thoroughly document everything

At every step of the project, from start to finish, create and maintain accurate documentation of all client interactions and discussions. Provide your client with copies and ensure they sign off on any agreed-upon changes so you’ve got your bases covered if a problem arises later.

How to Get Low-Cost Professional Liability Insurance Now

Protect your finances and professional reputation with a customized professional liability insurance policy from Zensurance.

Getting the right professional liability insurance doesn’t have to be a hassle. Fill out our online application to get a free quote. 

Our licensed brokers will do the legwork for you, shopping our partner network of over 50 insurers to find a low-cost policy, tailor it to address the risks you face and send you a certificate of insurance instantly.