What is Miscellaneous Professional Liability (MPL) Insurance?

If you cater to professional clients, you can help protect their finances through Miscellaneous Professional Liability Insurance (MPL). Although professional liability can help, MPL provides specific coverage for cases of negligence, errors, or omissions when performing professional services. While many professional lawsuits prove baseless, MPL insurance is a worthwhile product for clients at high risk of alleged professional negligence. 

Types of Companies that Purchase MPL Insurance

MPL insurance opens opportunities to serve a longer list of business types, including:

• Professional service firms (e.g., consulting firms, law firms, accounting firms): These firms require mandatory MPL insurance to protect against errors, inaccuracies, or professional negligence. Attorneys and law firms also need protection against breach of professional duty and accusations of malpractice.
• Technology companies (e.g., software developers, IT consultants): Although not mandatory, technology companies, IT consultants, software developers, and other technology professionals need protection against lawsuits alleging errors, omissions, or failure to deliver promised services or products.
• Financial institutions (e.g., banks, investment firms, insurance companies): Another field where MPL insurance is mandatory, brokers can face claims they provided bad advice that led to financial loss. In the case of insurance companies, failure to provide sufficient coverage, as well as suits against agents themselves for issues such as errors, omissions, and negligence can also occur.
• Real estate professionals (e.g., real estate agents, property managers): Mandatory in this industry, coverage provides protection against claims related to errors, misrepresentation, or negligence in property transactions or management.
• Advertising and marketing agencies: These individuals can face lawsuits related to failing to deliver, as well as things such as deceptive advertising, inequality, sexism, challenges of representing brands that cause harm, etc.
• Educational institutions (e.g., schools, colleges, universities): Today, parents are overly sensitive to classroom and school-related incidents impacting their children’s health, well-being, or quality of education. This includes lawsuits against institutions but can also be directed at teachers.
• Nonprofit organizations: Employment-related claims tend to be the biggest challenge for charitable organizations, including sexual harassment, wrongful termination, discrimination, and wage-and-hour disputes. However, other claims can arise related to donor dissatisfaction, injury or property damage at fundraising events, and fraud.
• Construction and engineering: Risk of safety and non-compliance issues related to structure, waste management, danger to communities, pollution, noise, and more make MPL insurance mandatory for these companies and individuals.
• Manufacturers and distributors: These companies can be held responsible for damage or personal injury related to faulty products, negligence due to failure to provide proper warnings, etc.

As professional lawsuits can cost millions for settlements and legal fees, MPL insurance in these industries is essential.

Coverage Offered by MPL Insurance

Coverage offered through MPL insurance policies typically covers the following:

• Errors or omissions
• Failure to provide a service in a timely fashion or at all
• Misrepresenting the service to be performed
• Claims-made and reported coverage
• Duty to defend contract
• Tailored definition of professional services
• Punitive damages
• Coverage for independent contractors
• Personal injury, including emotional distress
• 80/20 hammer clause

You might find it necessary to offer more specific coverage, such as:

• Contingent bodily injury and property damage
• Pollution
• Sexual abuse
• Copyright and trademark infringement
• Disciplinary proceeding
• Loss of earnings and expense reimbursement
• Public relations expenses
• Subpoena and record request assistance
• Pre-claim assistance expenses

Benefits of MPL Insurance

MPL insurance offers the following key advantages to both businesses and professionals:

• Protecting “emerging” professions: There are so many emerging professions with gray areas when it comes to fulfilling the expectations of contracts and customer agreements. As a result, these businesses or professionals are open to scrutiny regarding what meeting customer expectations and experiences entail. Also, many emerging “professions,” such as influencers, are vulnerable to lawsuits based on their advice and claims despite not having any specific skills, knowledge, or education.
• Filling gaps: MPL insurance is considered the solution for those difficult-to-place or insure clients. This includes things such as errors or omissions from IT professionals to less conventional roles such as writers. While it might seem professional liability covers everything, insufficient coverage for many professionals can result in turned down claims. MPL insurance offers coverage for these gaps.
• Covering the “little guy”: Many small business owners and contract workers have found themselves in the middle of lawsuits based on technicalities they didn’t know existed. Without the money to hire a lawyer to defend themselves, financial ruin is unavoidable. MPL insurance covers these situations.

Common Misconceptions About MPL Insurance

There are several misconceptions that lead people or businesses to overlook the necessity for MPL insurance, including:

Contract workers believe they are covered by their clients

Someone like an accountant, writer, or real estate agent working under contract for a major corporation might think they are covered by the company’s professional liability insurance. However, while in some cases there might be some coverage, it is usually limited and likely does not extend to people working under contract. Individuals need to protect their own licenses and careers with individual MPL insurance.

It costs too much to invest in MPL insurance compared to the risks of a lawsuit

Many freelance workers feel they can’t afford what they perceive to be costly MPL insurance premiums. However, professional lawsuits can cost over $100,000 for legal fees alone. Therefore, it makes more sense to pay out the small annual fee for peace of mind and financial protection.

Key Considerations When Purchasing MPL Insurance

When purchasing MPL insurance for your clients, consider the following:

• The instructions your client provides regarding their specific concerns about gaps in their liability coverage
• Whether the client’s expectations are reasonable in relation to their specific risks and coverage expectations
• The appropriate fee or billing structure for the premiums
• Whether your team has the knowledge to handle this type of policy or if you need to outsource the underwriting
• Possible challenges or “red flags” that make this particular policy riskier or more complex
  
  

Miscellaneous Professional Liability With Novatae

The risks of professionals in a wide range of diverse fields are unique, causing issues with basic liability insurance policies. As a result, there is ample opportunity for insurance companies to provide miscellaneous professional liability insurance for both individuals and businesses offering professional services. Reach out to Novatae today to learn more about our MPL insurance services here.

This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.