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Professional liability insurance or PLI is an insurance that protects professionals from claims brought by clients for negligence or other reasons. Often, general liability insurance does not cover lawsuits stemming from professional or business practices such as malpractice, carelessness, or misrepresentation. Therefore, professionals in fields that are prone to these types of lawsuits need to purchase professional liability insurance policies to make sure they’re protected.
Errors and omissions insurance (E & O insurance), professional liability insurance, or medical malpractice insurance protect you from lawsuits alleging that you made a mistake while providing professional services. This insurance can assist in covering court fees or settlements which might be prohibitively expensive for you or your company to pay on its own.
This insurance covers you and/or your company against allegations of:
The insurance is only valid if:
Every company or industry that offers professional services should consider getting professional liability insurance. The following are some examples of firms that may require this coverage:
Before clients agree to patronize your business, they may ask that you have an insurance policy in place. They want to ensure that if your organization fails to fulfill its promises or violates the terms of the contract, they will be compensated.
If a customer requests professional liability insurance, you must present a certificate of insurance that provides evidence of coverage and specifies the policy limitations.
Professional liability insurance is a critical component of any risk management strategy if you provide a service or make a career from your knowledge. It's the only commercial insurance covering you in the event of a lawsuit stemming from your work performance.
Professional liability insurance covers claims alleging that your error or negligence resulted in a financial loss regardless of guilt. To compare, general liability insurance covers legal proceedings alleging property damage, Bodily injuries, and copyright infringement and other additional exposures but not for your knowledge.
A design miscalculation, for example, could result in a costly disaster for an architect. If a customer fails to meet their earnings target, a business adviser could be held responsible.