Human error plays a huge part in professional liability insurance claims. Almost all industry professionals are more or less prone to making a mistake they could be sued over. Accountants, real estate agents, attorneys, appraisers, and countless others – all need to think of ways to protect themselves from malpractice claims.
Fortunately, human error can be minimized with proper care and attention. By setting specific processes and best practices in place, any professional liable to malpractice claims can reduce the risk of getting sued. Let’s take a closer look at why those insurance claims might become a problem, as well as how to prevent them.
In some professions, like accounting, a simple error can have substantial consequences for both the client and accountant. Not using proper tax forms, miscalculating payroll taxes, or even just placing a number in the wrong column, can be a devastating mistake. The same holds true for real estate agents with their possible errors: failure to disclose leaky roofs or wet basement, providing incorrect square footage and zoning information, etc.
None of these are intentional, but they can ruin your reputation and professional practice. Taking extra care is sometimes enough. However, for more serious errors that arise from poor client communication and similar issues, you should know how to cover your bases.
Being extra careful is the best (and first) defense against human error. Always double-check your work and your information. Even if a deadline is approaching and you’re struggling to meet it, don’t skimp on quality for the sake of speed. Tax and accounting professionals; rerun your numbers. Real estate agents, appraisers, and lawyers should double check if the information you have is correct. Take the time to make sure you’re doing everything correctly.
A contract that clearly defines the conditions of your business dealings with clients can help you immensely. Having a contract doesn’t mean you won’t get sued for breaching it, but it does clearly define what your obligations are. Use it to outline the services you provide, but also the detailed dispute steps in case of client dissatisfaction. It’s good to have deadlines in it as well, and you should be very clear about the terms of payment.
It’s important to keep the clients updated on your work. Touch base with them frequently and start managing their expectations early on in the process. In case of any complaints, make sure to solve them quickly, so they’d have no cause to hold a grudge. Good communication covers you in areas that a contract doesn’t cover, no matter how detailed it is. Also, make sure you document all communication – don’t rely on verbal agreements. Always send an email to confirm any deal you’ve previously created.
If it comes to a malpractice or negligence claim, Professional Liability Insurance or error & omissions (E&O) will be able to protect you to an extent from the potentially enormous financial costs. In any professions that provide legal advice, Professional Liability Insurance is especially handy. Those are highly litigious areas, so it’s better to be safe than sorry in most cases.
We’re only human, so we make mistakes – but they don’t have to cost us everything. Professionals in accounting, real estate, and law, among others, need to be extra careful about how they run their business. However, they should also think ahead, and ensure they’re prepared for an adverse outcome.
The Landy Agency is a national leader in providing non-medical, professional liability and cybercrime insurance for accountants, attorneys, and real estate professionals. John can be reached at 781‐292‐5417 or johnt@landy.com. Visit www.landy.com for more information.
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