Professional liability insurance (PLI) is insurance that protects professionals such as accountants, lawyers, and physicians against negligence and other claims initiated by their clients.
Professionals who have expertise in a specific area require this type of insurance because general liability insurance policies do not offer protection against claims arising out of business or professional practices such as negligence, malpractice, or misrepresentation.
Depending on the profession, professional liability insurance may have different names, such as medical malpractice insurance for the medical profession, and errors & omissions insurance for real estate agents. Professional liability insurance is a specialty coverage that is not provided under homeowners' endorsements, in-home business policies, or business-owners' policies. It only covers claims made during the policy period.
Professional liability insurance policies are usually arranged on a claims-made basis, which means coverage is good only for claims made during the policy period. Typical professional liability policies will indemnify the insured against loss arising from any claim or claims made during the policy period by reason of any covered error, omission or negligent act committed in the conduct of the insured's professional business during the policy period. Incidents occurring before the coverage was activated may not be covered, although some policies may include a retroactive date.
Professional liability insurance doesn’t cover every kind of claim. It won’t help your business with claims of:
Medical malpractice insurance is a common example of a type of professional liability insurance. Medical professionals do their work under the not inconsiderable threat of facing lawsuits for alleged medical malpractice, which is defined as an act or omission by a medical provider in which they provide treatment that falls below the standard of care, resulting in injury to or the death of the patient. Medical malpractice insurance can offset the cost of such lawsuits to providers.
You may be wondering who needs professional liability insurance. It’s an important coverage that business owners who provide a service to a client or customer should have. You’ll want to get professional liability insurance coverage if you:
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