Professional Liability Insurance

Professional Liability Insurance

Professional liability insurance (PLI) is insurance that protects professionals similar to accountants, lawyers, and physicians against negligence and different claims initiated by their clients. Professionals who have expertise in a specific space require this type of insurance because general liability insurance policies do not provide protection towards claims arising out of business or professional practices resembling negligence, malpractice, or misrepresentation.

How Professional Liability Insurance Works
Depending on the profession, professional liability insurance might have totally different names, similar to medical malpractice insurance for the medical profession, and errors & omissions insurance for real estate agents. Professional liability insurance is a specialty coverage that's not provided under residenceowners' endorsements, in-home-based business insurance policies, or business-owners' policies. It only covers claims made during the coverage period.


Professional liability insurance policies are normally arranged on a claims-made basis, which means coverage is nice only for claims made throughout the coverage period. Typical professional liability insurance policies will indemnify the insured against loss arising from any declare or claims made in the course of the policy period by reason of any covered error, omission or negligent act committed in the conduct of the insured's professional enterprise throughout the coverage period. Incidents occurring before the coverage was activated is probably not covered, though some insurance policies might include a retroactive date.

What Professional Liability Insurance Does Not Include
Coverage does not embody criminal prosecution, nor all forms of legal liability under civil law, only these listed in the policy. Cyber liability, covering data breach and other technology points, might not essentially be included in core policies. Nevertheless, insurance that covers data security and different technology security-related issues is available as a separate policy.

Professional Liability Coverage Wording
Some professional liability insurance policies are worded more tightly than others. While a number of coverage wordings are designed to fulfill a said minimum approved wording, which makes them easier to check, others differ dramatically within the coverages they provide. For instance, breach of duty could also be included if the incident occurred and was reported by the policyholder to the insurer in the course of the coverage period.

Wordings with major authorized differences may be confusingly just like non-lawyers. As an example, coverage for "negligent act, error or omission" indemnifies the policyholder in opposition to loss/circumstances incurred only because of any professional error or omission, or negligent act (i.e., the modifier "negligent" does not apply to all three categories, though any non-legal reader may assume that it did). Meanwhile, a "negligent act, negligent error or negligent omission" clause is a much more restrictive policy, which would deny coverage in a lawsuit alleging a non-negligent error or omission.

Example of Professional Liability Insurance
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 going through lawsuits for alleged medical malpractice, which is defined as an act or omission by a medical provider in which she or he provides remedy that falls below the standard of care, leading to injury to or the demise of the patient. While most medical malpractice cases are treated as civil torts in the United States, medical malpractice insurance can offset the price of such lawsuits to providers.

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