Category: Allegations of Misrepresentation

Allegations of Misrepresentation

Protect Your Business Against Allegations of Misrepresentation

When it comes to professional agreements, each party is accountable for holding up his or her side of the contract. If one party convinces another into the contract through misleading statements, this could be considered business misrepresentation.

How Allegations of Misrepresentation Happen

There are three types of misrepresentation:

  • Innocent misrepresentation
  • Negligent misrepresentation
  • Fraudulent misrepresentation

In innocent misrepresentation, the person who makes the claim had reason to believe that he or she was giving a true statement that later turned out to be false. Negligent misrepresentation, on the other hand, occurs when a person doesn’t do adequate research to deliver an accurate representation. Fraudulent misrepresentation is more serious. This is when a person makes an untrue statement intentionally.

How to Protect Your Business

All business owners should have professional liability insurance. Professional liability insurance protects the insured against any legal claims against your company for:

  • False advertising
  • Negligence
  • Misrepresentation

Even if you consider yourself innocent of the allegations against your company, you have to pay the legal fees to defend yourself against the plaintiff.

Mistakes happen. No matter what industry you work in, if you sell any type of service for payment, you could have allegations of misrepresentation against you. Without adequate insurance coverage, your company would have to fit the bill.