Insurance for Professional Services Industry

Just as a manufacturer is worried about products liability and a construction company is worried about workers compensation, PSFs have to deal with their #1 exposure head-on.

The threat we’re worried about is a lawsuit from customers or other counterparties who were financially harmed by the performance of (or failure to perform) professional services.

Any one of a company’s clients can claim financial loss. Some examples:

those who sue their accountants after being audited by the IRS after inadvertently underpaying their taxes;
those who sue their lawyers for failing to competently represent them in court;
the patients who sue the company who ran the clinical trial in which he or she participated and was subsequently injured;
the developers who sue their architects after the city forces them to halt construction due to zoning restrictions;
the data warehousing company who sues their cyber security consultants after hackers exploit an unforeseen weakness in the new system;
the high-growth company that sues their insurance brokers for…
Cyber and privacy liability is important as well. By their nature, many PSFs collect sensitive data including PII or interact in some way with their clients’ network or systems. If data is compromised or hackers get to a client through you, your liability could be massive.

Once we move out of the E&O world, however, these companies start to look similar to any other. Most states require employers to purchase workers compensation insurance for their employees. Companies with a high percentage of physical labor on the payroll will have to pay close attention to their workers comp premium and coverage.

The importance of computers and system integrity for e-commerce companies cannot be overstated, so let’s start with some of the risks insurance addresses. The theft of customers’ personal info — or worse yet, their financial info — is a looming threat for online retailers. Bad actors can wreak havoc by stealing data, encrypting your data and extorting you, or shutting you down with a DDoS attack. These challenges can cause lasting damage to a company who isn’t prepared to face them.