Your limited liability company will need insurance like general liability insurance, workers’ compensation insurance, and professional liability insurance. On this page, we’ll answer the questions: what is professional liability insurance and how does it benefit you?
On this page, you’ll learn about the following:
What is professional liability insurance?
Also known as PII (Professional Indemnity Insurance), the PLI or Professional Liability Insurance is designed for consultant organizations or individuals against any lawsuit filed by the client regarding the financial loss. Commonly called “errors & omissions” or E&O, PLI is helpful for professional services and advice providers or companies that are often trapped with a civil lawsuit and negligence claim by the client.
While covering the negligence claim, the insurance will give protection by focusing on the alleged loss or failure of the client due to any omission or mistake done by the consultant within the policy period. The intellectual property and other confidential data are safe with the PLI company while it analyzes everything.
Who needs professional liability insurance?
Liability insurance policy is beneficial for various business or service providers, namely architects, counselors, brokers, financial professionals, designers, IT developers, and so on. You can either go for a professional insurance cover or contractual clause issued by the clients to have liability insurance for working within the policy period.
If the business requires direct dealing with the customers, having a PLI is crucial as customers might make a claim out of their perspective even though there is no error on your side.
How does professional liability insurance work?
Professional Liability Insurance comes with an array of features that are beneficial in different case scenarios of the applicable policy period. The key features are –
Eligible For All Professionals
Be it medical practitioners and professionals or management consultants, chartered and financial accountants or advocates, engineers and architects or designers –the PLI-covered claim is applicable to almost all the professionals as per the laws of a specific insurance company.
The professional liability policy will cover all legal liabilities due to omissions insurance, errors, and negligence while providing professional services that result in any loss or injury to the third party or damage to the property. In this context, you should also know that the insurance will only cover any claim made during the policy period and not after that.
Group Policies Granted
A professional Liability Coverage contract is also compatible with more than one person from the same company or profession. What is better, group policies come with discounts according to the number of people in that group. This will help the business owners to pay for legal liability expenses, property damage expenses, and so on.
Expenses For Defense
During your legal defense in the court against alleged errors and professional errors, the PLI will cover the fees and additional charges by paying out of your insured sum. You do not have to bear any expense for defending yourself at the court, thanks to different policies like medical malpractice insurance, defense costs, liability insurance cost, and so on.
Cost of Professional Liability Insurance
The cost of PLI differs from company to company. The businesses from variegated industries and sectors often get customized liability cover, so there is no fixed cost for Professional Liability Coverage. There are some factors on which the cost depends and varies, which should be known by all business owners –
- Coverage of policy
- Business or industry type
- Risk factor associated with the business
- Retroactive period
- Age of the business
- Location and size of business
- Annual turnover and credit score
- Claims history (if any)
- Bodily injury type
As the perfect risk management tool, PLI will help you pay the money or debt owed to the client and defense counsel at court, thereby allowing you to have peace of mind. You no longer must worry about paying a hefty amount to the clients or having your business go bankrupt.