Insureon Blog

How to Prevent Professional Liability Lawsuits

28. April 2016 07:58

gavel and old law books

No knock against Professional Liability Insurance, but some of your best risk management strategies have nothing to do with insurance. That’s not to say you should drop your coverage. In fact, the point is quite the opposite.

Taking steps to stay out of a courtroom actually enhances your liability policy’s protection. Instead of simply relying on your Professional Liability to do all the work, you have two lines of defense to keep your assets safe. Here are some risk management strategies you can use to prevent professional liability claims.

Professional Liability Lawsuit Prevention Tip #1: Document Everything

Attorney and founder of SJS Law Firm Shavon J. Smith (@TheSJSLawFirm) says, “The biggest mistake small-business owners make is failing to have complete documentation related to the claim. Small businesses have a lot to juggle, and many tasks, such as thorough recordkeeping, go by the wayside.”

In truth, no piece of paper can stop someone from suing you; however, it may cut them off at the pass. If your evidence demonstrates that a claim lacks merit, your client’s lawyer may advise them to call off the suit. Moreover, your records might help keep everyone on the same page so your client has less reason to sue.

To that end, you may want to use…

While you can create much of your documentation on your own, Robert Stetson of Bernkopf Goodman LLP (@BernkopfGoodman) suggests hiring an attorney. “Most small business disputes center around a legal document, such as a contract, lease, or insurance policy,” says Stetson. “Often, they turn on a phrase which could have been crafted in a manner more conducive to the small-business owner’s needs and the realities of their business.”

Professional Liability Lawsuit Prevention Tip #2: Communicate Clearly

Proactive recordkeeping is important, but so is communication, especially if you have to warn your client about:

No one wants to tell a client that things aren't going well, but most people understand that challenges are often part of the project landscape. Notifying clients about complications gives them an opportunity to adjust their expectations, agree to new solutions, or negotiate an end to the contract. Any of those outcomes are better than ending up in court.

This post is part of an ongoing series on how small-business owners can navigate the professional liability claims process as smoothly as possible. Stayed tuned for upcoming posts about filing, preventing, and defending professional liability claims.


Professional Liability Insurance | Small Business | Small Business Risk Management | Tips for All Small Businesses

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