Professional liability insurance,
commonly known as PLI, is an insurance that protects professionals, including
accountants, lawyers, engineers, architects, doctors, chartered accountants,
and medical practitioners against negligence and other claims initiated by
clients. Professionals who have years of experience in a specific area needs
this type of insurance because general liability insurance does not protect
against claims arising out of business or professional practices, including
negligence, malpractice, or misrepresentation. Professional liability insurance
also protects business interests against legal claims for errors, omissions,
professional neglect for both the principles as well as their employees.
Key Advantages of Professional Liability Insurance Policy
There are countless benefits of
the professional liability insurance policy. Let’s take a look at some of them
below:
1. Designed
to meet the requirements of different professionals and professional services
2. Exhaustive
coverage against several risks
3. Cover
legal expenses as well as the cost incurred with the prior consent of the
insured
4. Hassle-free
paperwork
5. Mid-term
changes in the sum insured allowed
How Does It Work?
Depending on your profession,
this insurance may have different names, including medical insurance for the
medical professionals, and error & omissions insurance for real estate
agents. Professional liability insurance is a kind of coverage policy that does
not provide under homeowner’s endorsements, in-home business policies or
business owner’s policies. It only consists of claims made during the policy
period. In general, this coverage policy is arranged on a claims-made basis. It
means this policy is good for claims made during the policy period.
Professional liability insurance
covers the insured against loss arising from any claim made during the policy
duration by reason of any covered error, omission or negligent act committed in
the conduct of the insured’s business during the policy duration. Incidents
that occur before the coverage will not be covered; however, some policies may
include a retroactive date.
What Does Professional Liability Insurance Not Cover?
This coverage policy does not
include criminal prosecution or any type of legal liability under civil law.
Cyber liability that includes data breach and other technology issues will not
be included in core policies. In addition to this, professional liability
insurance that covers data security and other technology security-related
problems is available as a separate policy.
Additional Details
There are some professional
liability policies that are worded more tightly than others. However, there are
some policy wordings that are created to satisfy a stated minimum approved
wording that makes them easier to compare, others dramatically in the policy
they cover. For instance, breach of duty may be included if the event occurred
and was shared by the policy owner to the insurer during the policy duration.
Wordings with legal differences
can be similar to non-lawyers. For example, policy for error or omission covers
the policyholder against loss/circumstances incurred as a result of any
professional error or omission, or negligence act.
Example of Professional Liability Insurance Policy
Medical malpractice insurance is
the most common example of a type of professional liability insurance.
Professionals who belong to medical line do their work under the not
inconsiderable threat of dealing with lawsuits for alleged medical malpractice
that shows as an act or omission by a medical professional in which he or she
provides treatment that comes below the standard of care that results in injury
to or the death of the patient. While many malpractice cases are treated as
civil torts in the US, a medical malpractice insurance policy can offset the
cost of lawsuits to providers.