professional liability
Definition
Professional liability is a type of legal responsibility that applies when someone who offers expert services causes harm to a client by making a mistake, giving bad advice, or failing to meet the standard of care expected in their field. If a client suffers a financial loss or other damage because of your professional error or oversight, they can sue you to recover that loss. This is different from general liability insurance, which covers physical injuries or property damage.
Example
A bookkeeper makes an error on a client's tax filing that results in a costly IRS penalty, and the client sues the bookkeeper to recover the money they lost because of that mistake.
Watch Out
Many general business insurance policies do not cover professional liability claims, so if you provide any kind of expert advice or service, you likely need a separate professional liability policy to protect yourself.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.