What is Professional Liability Insurance?
When you provide an estimate or quote, you are setting the stage for the desired events that will net you a profit! Professional Liability Insurance (PLI) acts as a safety net for experts like accountants, lawyers, and doctors, shielding them from claims of negligence or other legal challenges brought by their clients. If your work requires specialized knowledge, PLI is essential because general liability coverage won’t protect you from issues like malpractice, errors, or misrepresentation. This specialized insurance ensures you’re covered when your quality of service may be scrutinized.
How Professional Liability Insurance Works:
Professional liability insurance conveys many meanings depending on the industry. For doctors, it’s known as medical malpractice insurance, while real estate agents might recognize it as errors and omissions coverage. This specialized insurance isn’t something you’ll find tucked into your homeowner’s policy or bundled with your standard business insurance; it’s a unique shield tailored to protect your professional reputation.
Most PLI policies are of the “claims-made” variety, meaning you’re only covered for claims made and incidents that happen while your policy is active. There’s also the “occurrence” option, which has your back if something goes wrong while you’re insured, even if you let your policy lapse before a claim is made. But beware—these occurrence policies are the unicorns of the insurance world, rare and hard to come by.
In general, a standard professional liability policy ensures that you’re covered for any financial loss resulting from claims made during the policy period due to any slip-ups, oversights, or negligent acts that happen while you’re doing your job.
What is Included in Professional Liability Insurance?
Coverage doesn’t extend to criminal charges or every type of civil legal issue—it only protects against what’s specifically spelled out in your policy.
Here are some examples of liability types NOT covered by PLI:
- Injury to employees
- Employee discrimination lawsuits
- Vehicle business use
- Bodily injury
- Business property damage
- Injuries or damage to customers
Here are some examples of liabilities which ARE covered by PLI:
- Errors or mistakes while providing services
- Failed deliveries
- Missing important deadlines
- Failure to meet standards or negligence
- Breach of contract
- Defense costs
- Copyright infringement
Professional Liability Policy Language:
Professional liability policies can be a bit tough to decipher, with each provider crafting their own version of coverage language. Some policies are written in a way that makes them easy to compare side by side, while others can be so different that what looks like similar protection isn’t the same at all.
For those of us without a law degree, the slight tweaks in wording can be challenging. Take, for instance, these two phrases:
- Negligent act, error, or omission
- Negligent act, negligent error, or negligent omission
The first phrase covers you if you make a professional mistake, skip a step, or slip up due to negligence. But if the error or omission isn’t directly negligent, you’re out of luck.
On the other hand, the second phrase is more restrictive, covering only those mistakes, errors, or omissions that are proven to be negligent. If you want to be protected across the board, you’d need the clause to say something like “negligent acts, negligent errors, negligent omissions, errors, or omissions”—covering all the bases.
How Much Does It Cost?
The price tag on your professional liability insurance isn’t one-size-fits-all; it’s shaped by the industry you’re in—after all, some fields come with more risks than others. Your location, how long you’ve been in the game, your claims history, and the size of your team also play a big role in determining your rate.
Your coverage limits and deductive amount also will influence what your rates reflect. National insurance experts claim that the median cost for professional liability insurance is $61 per month, with most policies commanding between $600 and $1,200 annually. Your policy limits will also vary drastically and can range from $200,000 to $1.5 million or more. Many policies will include limits of $1 million and an “aggregate limit” that lasts for the policy’s entire life span.
Who Needs PLI?
The individuals who stand to benefit most from this type of coverage are those who offer contracting services. IPLI is also highly encouraged when a typical day sees you offering advice. Your field may also dictate that you are required to have coverage to operate. Here are some examples of professionals who need this insurance:
- Anyone in consulting
- Engineers
- Insurance agents
- Real estate agents
- Brokers
- Architects
- Accountants
- IT Professionals
- Counselors
- Dentists and Doctors
- Financial advisors and planners
What Are the Basic Types of Professional Liability Policies?
The two predominant types of professional liability insurance are occurrence and claims made. Claims-made means that the policy needed to be active when the lawsuit was initiated. Meanwhile, an occurrence policy ensures you’re covered for any eligible claim tied to an incident that happened while the policy was active, even if that policy has since expired.
What Is the Difference Between Personal and Professional Liability Insurance?
Personal liability insurance covers damages or injuries to anyone else that take place on your personal property. Professional liability insurance will cover you if you encounter claims against you for errors, omissions, or other events that can happen while you offer professional services.
Do All Professionals Need PLI?
The professionals who will benefit most from professional liability insurance are real estate agents, attorneys, and those who provide medical services. For others, their need for PLI hinges on specific regulations within the industry. Specific contract elements and the ultimate level of risk during the employee’s exposure can also determine who should consider this type of coverage.
How Do I Find Professional Liability Insurance?
We have been helping clients fulfill their dreams for many rewarding years here at the Alexander Insurance Agency of St. Charles. Even if it is a misunderstanding that suddenly balloons into a serious issue, your coverage with us will protect you. Average costs are between $700 and $1,300 annually, which is much less expensive than legal assistance. There’s nothing quite as comforting as knowing you are covered when accusations fly. When it comes to advice, those on the receiving end can suffer from communication breakdown! Contact us today to get a handle on liability and spend the day’s vital hours reaching for revenue-positive victory.