People have become more aware of their rights in day to day
life. They make sure that they receive quality service from
every person they approach, professional or non professional.
They are ready to spend as much as money that is required to
have quality service and if they dont get the service that
was offered, they become unsatisfied customers. This awareness
have increased the number of legal issues related to lack of
quality in service or any mistakes that has happened during
the service rendered to one person. And the professionals and
other businessmen have become more prone to have these liability
suits against them if any untoward event happens.
Professional liability insurance of every field are expected
to have a certain level of expertise before they are allowed
to offer their service to the public. The level of their performance
is being ensured by laws, registrations, certifications etc
without which they may face legal intervention if they practice
in their professional field. For example, doctors or lawyers
are required to have specific degrees before they practice and
also they are required to register with the medical council.
Without these registrations, they may face problems if they
are offering their service to the public. And also, in case
of any claims which are filed against them as negligence in
providing care, they would be huge financial trouble.
Professional liability insurance
is an insurance coverage that provides the professional a protection
against the claims which has been filed against the individual
and those which he becomes legally obliged to pay, due to any
negligence or errors that has happened during the service to
the customer. This insurance is also known as Errors and Omissions
insurance as this insurance is a protection for the liability
that has occurred due to the negligence during service rather
than a liability that has occurred by accident. In case of a
homeowners policy, liability coverage is also provided, but
this is coverage for any accidental or unintentional injury
that has happened to any person while on the property of the
insured. But in professional liability insurance, the coverage
is offered for the liability that happens due to any damage
or injury to any person that has occurred due to a mistake or
negligence that has happened during the service given by the
This is the most critical insurance to your business as legal expenses are so high and it would be difficult to manage the expenditure as well as any claims which may be huge which may need to be paid.
liability insurance covers negligence or errors or omissions
in your professional service. This may include loss of client
data, software or system failure, negligent oversell etc. Mostly
the professional liability insurance includes
a) Legal defense the insurance would pay for any claims that you have to pay,
by judgment. The amount of payment of the claim would be till
the upper limit of your coverage.
b) Coverage is extended to W2 employees and 1099 subcontractors as well-the
insurance would protect your company against any claim that
related to the work done by a subcontractor on your behalf.
The subcontractors would be covered under your policy, if you
are being sued. If the subcontractor has been sued regarding
the claim or if he is sued along with you, this policy would
not cover for him.
c) Options of intellectual property infringement The professional liability
also covers for you if you are sued for intellectual property
usage, like software program.
d) Personal injury
e) World wide coverage.
Professional liability insurance is offered by the insurance companies to a lot of professional people. For example,
Lawyers-Extensive coverage is offered to
lawyers including financial liabilities from any claim against
malpractice. As high a sum assured as $10 million are offered
as the professional liability insurance for them.
Accountants -They also are offered a sum
assured as high as $10 million by several insurers.
Architects and Engineers-They are offered
a sum assured of $20 million against any claims related to pollution,
disciplinary issues etc.
Nurses-Though many hospitals provide professional
liability insurance to their staff, this may not be sufficient
to cover any claims if you are sued in a malpractice claim.
The professional liability insurance coverage is also extended
to student nurses by several insurers.
Nurse practitioners and nurse practitioner students-The
professional liability insurance is a necessity for this group.
In short, almost all professionals are offered the professional
liability insurance by the insurers, though the sum assured
may be different for different professions. And it becomes the
responsibility of the professional to make sure that he has
this insurance before he starts practicing, for his own financial
and professional security.
The terms and conditions of the insurer regarding the policy would be mentioned on the policy. Before purchasing a policy from a particular insurer, it is wise to read all the terms and conditions and clarifies any statements that are not clear to you. This would include the actions or services which are covered under the policy, the actions or services which are excluded, how a claim would be settled and paid, if there are any limitations to the payment etc. It is extremely important on your part to be clear on all these as if not, you might face problems when you have a claim. Once you are filling up the application form, it is crucial that you answer all the questions truthfully as these statements would be examined very carefully, before issue of the policy and also whenever you have a claim.
The exclusions in Professional
liability insurance may include dishonest acts, fraud,
criminal activities as well as malicious acts, claims involving
one insured versus another, sexual harassment, discrimination,
real estate claims, workers compensation claims etc. Each policy
might have a different exclusion which should be noted carefully
before purchasing the policy.
Also it would be mentioned in the policy as to how much the limits of the coverage would be for each condition that is covered, as well as the deductible for each claim.
Also most insurers put in a clause in the insurance policy document itself
that the claims should be submitted in due time for payment.
This ensures the simplicity and efficiency in claim processing
for the insurer.
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