Professional liability insurance (PLI) is insurance that protects professionals such as accountants, lawyers, and physicians against negligence and other claims initiated by their clients. Professionals who have expertise in a specific area require this type of insurance because general liability insurance policies do not offer protection against claims arising out of business or professional practices such as negligence, malpractice, or misrepresentation. Depending on the profession, professional liability insurance may have different names, such as medical malpractice insurance for the medical profession, and errors & omissions insurance for real estate agents.
1. Work mistakes and oversights :
Sometimes a simple mistake can cause one of your clients to lose money. When a client sues over an error made by your business, professional liability insurance can help pay for your legal defence costs and more.
Example: An accountant incorrectly enters a company’s financial transactions into a spreadsheet, which leads to inaccurate budget projections. When the budget falls short, the company traces the mistake to the accountant and files a lawsuit. The accountant’s professional liability policy covers the cost of hiring a lawsuit and the eventual settlement
2. Undelivered services :
If your business promises to provide a service and fails to deliver, a client could sue – especially if it negatively impacts the client’s bottom line
Example: A management consultant promises a company that it will improve its profits by 20% by a certain date. When the date arrives, profits have gone up, but not as much as projected. The company sues the consultant over its financial troubles. Professional liability insurance helps cover the consultant’s legal defense costs.
3. Accusations of negligence
If your business is accused of negligence, such as failing to meet industry standards, then it could face a professional liability lawsuit.
Example: An architect designs a building for a client, but the blueprint fails to meet the project’s specifications. The client files a lawsuit, accusing the architect of negligence. The architect’s professional liability insurance covers the cost of the eventual settlement.
4. Missed deadlines
If a professional misses a deadline, it can have tremendous repercussions for a client. Professional liability insurance provides protection when a client sues over late work
Example: A tax preparer misses a filing deadline for a client’s tax return and the IRS fines the client. The client sues the tax preparer to recoup the cost of the fine. The tax preparer’s professional liability insurance pays for the cost of hiring a lawyer and the amount that the court rules he must pay the client.
It protects your business against claims of mistakes or professional negligence, even if they're unsubstantiated.
Coverage does not include criminal prosecution, nor all forms of legal liability under civil law, only those listed in the policy. Cyber liability, covering data breach and other technology issues, may not necessarily be included in core policies. However, insurance that covers data security and other technology security-related issues is available as a separate policy.
We specialize in providing Professional Liability Insurance also called as Errors & Omissions Insurance (E&O) by helping various businesses engaged in providing services and advice like the ones listed below:
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