Malpractice and Business Insurance In the course of business performed by professionally-credentialed individuals, the risk of being sued for not doing one's job correctly increases significantly, especially when "correctly" depends on perceptions as well as expertise. Unlike a normal employee, where an employer or company takes on the risk of an employee's performance under vicarious liability, a licensed professional such as a doctor or lawyer can be sued personally. This risk, of course, puts the professional's personal assets at risk as well. In these instances, the loss potential can include the cost of actual damages to the victim, the cost of litigation fees, as well as punitive damages. To avoid total loss or bankruptcy in one instance, professionals regularly contract for insurance policies to cover their professional decision and activities. This type of insurance is called malpractice coverage. A malpractice insurance policy provides monetary coverage to a client that could range in amounts of thousands to millions of dollars. The client pays a hefty fee for such coverage since the risk of being sued for malpractice can occur with each and every case the professional handles. This type of coverage essentially indemnifies or protects the client from personal suit as the policy and the insurer become the legal defender of the client. For a claim to actually be paid on malpractice insurance an actual loss has to have occurred to the victim. Much of the litigation involved then tends to be around proof of the loss, with the plaintiff carrying the burden of making the case that an injury did actually occur. However, malpractice policies tend to be very narrow in scope to make sure the insurer doesn't end up holding the bag for any and all risks associated with a professional. Multiple terms and boilerplate language tends to be used to set up parameters and caps on risks involved. Given that the malpractice policy tends to be where the big money is for a legal case, lawyers will typically settle within the framework of the policy coverage since going much farther doesn't amount to much in reward (the professional just declares bankruptcy in return). Because malpractice suits, particularly in medicine, can result in such big payout amounts for injury and loss of life enjoyment due to ongoing conditions, a lot of debate regularly circles around whether such lawsuits should be capped completely. The defendant side involving the professionals and insurers say "yes" to lower their costs and dampen suits filed just to get a payout. The victim and tort attorney side say "no" since the threat of a malpractice lawsuit forces professionals to perform their care and deliver the quality of services promised to clients. Similar to malpractice, but a bit more general in nature, is an offering called business insurance. This type of coverage protects decisions and performance made by a business as an entity without the higher level of standard expected from a licensed professional. The policy provides insurance to pay for lawsuit costs associated with injuries caused by a business. Such injuries could occur from a product warranty, a contract misinterpreted, or a service performed that was not deemed satisfactory. Rather than deal with the costs of court, the business instead relies on its insurance policy to sort out the issues and pay out a claim if needed. Of course the business pays a commensurate fee for such coverage and financial protection. Insurance Site .org All Content Copyright 2011 InsuranceSite.org Next - Vehicle Insurance Privacy Policy Introduction Business Vehicle / Auto Property Health Insurance Life Insurance Worker’s Compensation Auto, Home, Life, Health, Business - How Insurance Works