Professional Liability Insurance: What it Does and Does not Cover
Every business or individual involved in providing professional advice or service needs to have protection against possible negligence claims filed by clients. A Professional Liability Insurance (PLI) or sometimes referred to as Errors and Omissions (E&O) can cover for the cost of getting legal assistance for these claims, and up to a certain extent, pay for the damages awarded in a civil lawsuit.
Why is professional liability insurance coverage important?
There is a common misconception that general liability insurance is sufficient to cover a business from claims filed by clients. But general liability is limited to accidents, physical injury, or property damage that occurred within the company premises. When the complaint involves professional negligence or malpractice, professional liability coverage by Next insurance comes into play.
Businesses of every size need professional liability insurance. Some states require every professional practice to carry this type of insurance. Some of the most common examples include accountants, medical professionals and lawyers. But anyone who provides professional service needs one too. A nail technician, a plumber, and a carpenter will all benefit from what this insurance covers.
What does professional liability insurance cover?
Understanding what professional liability insurance covers can be somewhat confusing. It is vital to adhere to the definition of ‘professional liability’, which pertains to the expertise of a particular professional and how he performs his job. Any lapse of judgement or errors made while individually fulfilling his responsibilities resulting in damage or harm to the client may fall under professional liability.
Every professional liability insurance coverage is different and is tailored to each profession. Professional liability coverage takes into account the risks carried by each job and uses it as a basis for what the insurance will, and will not cover.
Exclusions of a professional liability insurance
Perhaps one of the easiest ways to narrow down what professional liability insurance is good for is to enumerate and identify the exclusions. Although this may not be an extensive list because every insurer follows a different guideline and words their policies uniquely, here is a general list of what a professional liability does not cover:
- Any intentional wrongdoing committed by the professional or employee
- Any illegal activities such as hacking a computer system to sabotage a business rival
- Everything that falls under general liability such as accidents in the workplace or any injuries sustained by a client while in the company premises
- Injuries suffered by employees
- Disputes between the employer and the employee
- False advertising claims by customers
- Damage to property
Another critical aspect to keep in mind is that professional liability insurance does not cover any criminal prosecution as well as some forms of civil liabilities. For example, you may need a separate insurance policy if you want coverage for cybersecurity and other technology-related concerns.
At Next Insurance, it is our commitment to ensuring that every client gets the maximum professional liability insurance coverage, at reasonable rates. Our professional liability insurance policy is catered towards protecting your livelihood and reputation, while you go about doing your business.
