When a professional faces a malpractice claim, contacting the insurance carrier can often lead to further feelings of dread or worry. Yet it is critical to timely and accurately report every actual or potential claim, or coverage may be barred.
We explore and analyze current issues and relevant topics to help accountants, attorneys, architects and engineers, insurance agents and real estate brokers avoid a professional liability case.
Insurance policies covering professional liability risks commonly afford coverage with eroding limits - such that the insurer’s payment of legal fees and expenses reduces the policy limits available to pay a settlement or judgment - and require an insured’s consent to settle.
It is not uncommon for professionals who are not a party to a lawsuit to be subpoenaed to provide deposition testimony in the case. As long as the testimony remains factual and does not go into the area of expert testimony, the professional is only entitled to the statutory witness fee for the time of the deposition. The deciding factor is whether the professional is being called as an expert or as a fact witness. If called to provide factual information the professional is aware of, then the only compensation that is allowed is the statutory witness fee (which is currently $25 a day plus mileage, see RSMo. 491.280).
Limitation of liability clauses are not favored in the eyes of the law, but they are often upheld by the courts. To be effective, it is important the clause be reasonable and specific. An enforceable limitation of liability clause may drastically limit the potential liability of the professional. Professionals use contracts on a regular basis to secure payment and to define their scope of services. That very same contract can also be used to protect the professional from costly litigation. Limitation of liability clauses are provisions built into a contract that limit the servicing party’s exposure to damages.