What is professional liability insurance?

If you are unfamiliar with the term, professional liability insurance, or professional indemnity insurance, is a form of liability insurance that covers one for professional negligence due to misconduct of professional duty. Professional liability insurance protects professionals against lawsuits and claims made by clients against them, covering the costs of legal defence and any damage. Liability insurance for professionals covers claims made during the period when the insurance is active, and has a limit of indemnity and a deductible. The limit of indemnity is the maximum amount that the insurance company will pay for a claim made by a client, while the deductible is the amount of money that the policy holder must pay before the insurance policy takes effect. Professionals can be considered experts in their area of expertise, so if a client suffers a loss due to a professional’s breach of duty in the conduct of their professional business, a lawsuit may be made against him or her. Clients have the right to file a claim if you fail to deliver the service that your client expects.

If uninsured, a professional has a lot to lose if he or she were to have a claim made against them. Claims can result in financial judgements against your business and ultimately, large financial losses. Any professional person providing a form of service is eligible to get professional liability insurance. The insurance policy should be carried by independent business owners, and professions that can almost certainly benefit from the insurance coverage include dentists, lawyers, occupational therapists and many others. Bear in mind that the chances of getting sued for professional liability mostly depend on your clients’ expectations and not the quality of your work. As long as you are performing a service for a fee, professional liability insurance is highly recommended.