7 Continuous Professional Liability Insurance Must-Know Lessons

Continuous Professional Liability Insurance

7 Continuous Professional Liability Insurance Must-Know Lessons


This article delves into the value of reputation, the reputational risks posed by legal disputes, and the critical role professional liability insurance plays.



Continuous Professional Liability Insurance is indispensable!

Because what happens when an insurance claim is made against you 30 or 40 years later? Crazy right? But not impossible. Such is the story of the Humana Tower in Louisville, Kentucky. Humana’s 27-story corporate headquarters has been a beacon of architectural prowess since its completion in the mid-1980s.

But in 2019, what began as a simple renovation unveiled structural defects that had remained dormant for years. Faulty welds connecting the building’s columns were discovered – a potential financial and reputational catastrophe.

This led to a lawsuit with Humana accusing Michael Graves & Associates, DeSimone Consulting Engineering Group, and Wehr Constructors of Professional negligence, breach of contract, and building code violations.

Here’s the Elephant in the Room:

There is a 40-year gap between construction and the lawsuit. Technically, this is a long time passed for a claim to rise. And yet, a valuable lesson for every business owner and professional: continuous Professional Liability Insurance is indispensable.


Why Continuous Professional Liability Insurance?

Most industries that need professional liability insurance carry out work or services that can have long-term implications for their clients. And continuous Professional Liability Insurance shields these organizations from the financial aftermath of unexpected lawsuits, covering legal defenses, settlements, regulatory penalties, and repair costs.

Take the Humana case as an example: continuously maintaining the Professional liability insurance policy makes it possible to cover any liability insurance claim from decades past if the claim falls within the policy period.

So, when you invest in continuous Professional Liability Insurance, you invest in a policy that covers you for what is happening right now and everything you have done in the past. This is becoming more important with the rising tide of liability claims, especially in the construction industry.

Humana Tower is a Wake-Up Call For Employers and Business Owners   

The litigation costs, especially in the U.S., are surging. But it’s not just about the money but also the reputational costs, the time spent in courtrooms, and the strain of potential liabilities hanging over one’s head.

With that in mind, here are 7 key takeaways and lessons an employer can learn from this scenario:


One: Liability is Persistent, and so are Liability Claims

Past projects don’t just fade into history. No matter how meticulously a project is completed, latent defects can surface years or decades after completion. They also carry potential liabilities that can manifest years later.

So, employers and professionals must recognize that their responsibility for a project’s quality doesn’t end when the project does.

Remember, as demonstrated in the case of Michael Graves & Associates, the impact of professional decisions or errors gives you long-term liability exposure. This is even more reason to get a continuous professional liability insurance policy.

Two: Continuous Professional Liability Insurance is Indispensable!

Just because you think your work is impeccable doesn’t mean you won’t get unforeseen claims in the future. Potential liability claims can surface long after project completion, making continuous professional liability insurance non-negotiable.

You don’t want a lapse in coverage to expose you to significant financial risk. That is why understanding the “Claims-Made” Nature of your Continuous Professional liability insurance policy is essential. This means it only covers claims made while the policy is active.

If a claim arises and you no longer have coverage, you’ll be financially exposed, even if you had insurance at the time of the alleged error.

Three: Know your Retroactive Dates

A continuous professional liability insurance policy can potentially cover claims from the distant past, but it’s crucial to understand terms like ‘retroactive dates.’ This determines from which date the policy can cover potential claims, emphasizing the importance of early and consistent coverage.

Setting a retroactive date can be a game-changer for firms investing in a continuous professional liability insurance policy for the first time. It ensures that even older, previously completed projects fall under the policy’s protective umbrella.

Four: Proactive is Always Better than Reactive

By institutionalizing regular inspections and quality checks during and after a project, you can identify and address potential issues early, reducing long-term liability risks. So, establish regular inspections and quality control checks during and after project completion to catch and rectify potential issues early on.

Staying updated is also critical in industries governed by standards and codes, like construction and design. Ensure all employees, especially those in critical decision-making roles, are updated with industry standards, building codes, and best practices.

Adjust your professional liability insurance policy accordingly and practice continuous training and professional development to mitigate risks arising from outdated practices. Then, regularly review and discuss your coverage with your insurance provider to ensure it’s adequate and to understand any conditions or exclusions.

Five: Document Everything

Documentation serves as the backbone of defense in liability claims. From project details, decisions, and communications to quality checks, maintaining a detailed record can differentiate between a successful defense and a damaging payout.

Maintain thorough documentation of all projects, decisions, communications, and quality checks. In the event of a liability insurance claim, this can help establish what was done, when, and why.

Six: Ensure Contract Clarity

Always ensure that your contracts are clear about the scope of work, responsibilities, and liabilities. Sometimes, issues can arise from misunderstandings or ambiguities in contractual agreements.

A clear, concise contract sets the right expectations. It defines the scope, responsibilities, and liabilities, ensuring both parties are on the same page and minimizing potential disputes.

Seven: Your Reputation is on the Line

Beyond the evident financial ramifications of litigation, the reputational impact is a silent yet equally daunting challenge businesses face. A tarnished reputation can result in:

  • Loss of clients and revenue.
  • Difficulty in recruiting and retaining talent.
  • Strained stakeholder relationships.

What Can You Do?

Now that you know what happens when an insurance claim is made against you eons later, secure a continuous Professional Liability Insurance policy immediately. It will protect you from unforeseen exposures that could pop up down the road.

Then, develop a comprehensive risk management strategy, not just for immediate risks but also for long-term potential liabilities. The “duty to defend” clause in liability insurance protects employers from the often-astronomical costs of legal defense.

Whether a claim is valid or groundless, defending against it in court can quickly drain financial resources. Employers can also benefit from the expertise given by specialized attorneys without having to scout and vet legal experts on their own.

Additionally, having a “duty to defend” provision ensures employers have the best negotiators, potentially saving substantial liability insurance claims. And above all that, many “duty to defend” policies offer broad coverage, ensuring that employers are protected against various risks, some of which they might not have anticipated.

Conclusion: Professional Liability Insurance Should be a Continuous Cover

One of the most definitive lessons here is the importance of adopting a Continuous Professional Liability Insurance policy at the very beginning of business operations and maintaining it consistently.

Don’t overlook the importance of foresight, meticulousness, and the value of comprehensive professional liability insurance. Employers should take proactive measures to manage risks and protect their financial interests.

In a world of uncertainties, these safeguards offer firms the confidence to innovate, design, and build without the looming shadow of unforeseen liabilities. Well, here is a stark reminder that protecting yourself against potential liability claims is imperative for now and years later.


What is Continuous Professional Liability Insurance, and why is it considered an investment for businesses?

  • Continuous Professional Liability Insurance provides coverage for claims related to professional errors or negligence. It’s considered an investment because it safeguards a business against potentially costly legal expenses and damages, protecting its financial stability and reputation. But the key to continuous professional liability insurance is that it covers your business well into the future. 

How does Continuous Professional Liability Insurance differ from other types of business insurance?

  • Continuous Professional Liability Insurance is distinct from general liability insurance as it specifically covers professional mistakes and negligence, while general liability insurance focuses on broader liability risks.

What are the primary benefits of having Continuous Professional Liability Insurance for employers?

  • The primary benefits include financial protection against legal claims, coverage for defense costs, and safeguarding the business’s professional reputation.


What risks or liabilities does Continuous Professional Liability Insurance typically cover?

  • It typically covers claims related to professional errors, omissions, negligence, or malpractice that result in financial harm to clients or third parties.

Can you provide examples of situations where Continuous Professional Liability Insurance has proven to be valuable for businesses?

  • Examples include legal claims against a doctor for medical malpractice, a lawyer for errors in legal advice, or an accountant for financial mismanagement.

How can businesses determine the appropriate coverage limits and premiums for Continuous Professional Liability Insurance?

  • Determining factors include the type of business, the industry’s risk level, the business’s size, and previous claims history. It’s advisable to consult with an insurance expert for personalized guidance.

What are the must-know lessons that employers should consider when investing in Continuous Professional Liability Insurance?

  • The must-know lessons might include topics like assessing the specific risks in your industry, understanding policy exclusions, maintaining accurate records, and regularly reviewing and updating your coverage.

Are there any industries or professions where Continuous Professional Liability Insurance is particularly crucial, and why?

  • Industries like healthcare, law, finance, and consulting often have higher professional liability risks due to the nature of their services. Continuous Professional Liability Insurance is crucial here to mitigate potential legal and financial consequences.

What steps should employers take to ensure they are adequately protected by Continuous Professional Liability Insurance in the event of a claim or lawsuit?

  • Steps include promptly reporting claims to the insurer, cooperating fully in the claims process, and maintaining thorough documentation of the incident in question.

Can Continuous Professional Liability Insurance also cover legal expenses and court costs, or is it solely focused on liability protection?

  • Many policies do include coverage for legal expenses and court costs, which can be a significant benefit for businesses facing a lawsuit or claim.