What Are Business Malpractices?
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What Is Business Malpractice?

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What Are Business Malpractices in San Diego, CA


In legal terms, malpractice is defined as a “negligent professional activity or action.” Since this definition can be a little vague, let’s take a moment to discuss what can be considered a business malpractice and how such actions can affect your commercial insurance. It’s worth noting that malpractice refers to actions taken individually by employees or by the individuals actually in charge of running and operating a company or business.

Financial Fraud

One of the most common examples of business malpractice involves efforts to hide earnings or downplay financial losses. Not being entirely forthcoming about earnings and losses can have a big impact on your insurance. In this case, you could be accused of insurance fraud, since the performance of your business is based, in part, on profits and losses. Insurance companies use this information to determine premiums and assess risks. Financial malpractice can also refer to questionable billing practices.


This refers to the act of accepting or asking for money or gifts in exchange for special treatment or favors. For instance, gifts might be encouraged by clients wishing to receive special perks not offered to other clients. This may be considered a gray area, although it can affect your business and its reputation. It can also have a negative impact on your insurance rates if bribery activities become public knowledge.

Health & Safety Violations

Failing to follow OSHA rules and guidelines can be considered malpractice for any business. Violations of this nature can range from not posting required signs to failing to ensure work conditions are safe for everyone. Your insurance can be affected, since health and safety violations increase your level of risk. Employees may be more likely to have accidents, or there could be issues with machinery not being safely operated that affect your earnings.

Criminal Activities

The most serious type of malpractice for a business is anything involving criminal activities. This typically includes “white collar crimes.” Malpractice of this nature could involve violating trade regulations or engaging in complex schemes to avoid losing money or make more money in a deceptive way.

Environmental Damage

This typically involves overlooking regulations and guidelines for the sake of avoiding the costs that often go along with compliance. Insurance companies aren’t happy about this either, since you’ll be increasing risk again. Depending on the nature of the violation, you could be putting your own employees at risk of developing certain health-related conditions. In turn, you could have more workers’ compensation claims, which could result in higher insurance rates.

Attempts to Conceal Malpractice

Any attempts to cover up or conceal any of the activities already mentioned can also be considered malpractice. Even if you’re not initially aware of these activities, it’s important to take the appropriate steps if you do become aware of anything questionable. If you’re not sure about certain actions and whether or not they might be considered malpractice, consult with a business attorney. 

It’s vital to protect your business from avoidable dangers, and commercial insurance is one of the most valuable tools you can use to safeguard your business’s financial health. When it comes to commercial insurance, look to the professionals at Altra Insurance Services for sound advice based on years of experience in the insurance industry. We also offer reliable homeowners, renters, and auto insurance. San Diego residents can call one of our knowledgeable agents today at (619) 404-6311 to discuss their insurance needs. 

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