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Frequently Asked Questions(click to expand)
What Is Professional Liability Insurance?
If someone makes an error while providing a professional service to another business or individual then they could be liable for any costs or losses their mistake caused. Even if there was no mistake, Professional Liability is designed to cover businesses in the event of a lawsuit if they are sued.
These policies are usually designed on a claims-made basis, so PLI will only cover claims made during the actual policy period purchased. Also, certain kinds of professional services are legally obligated to purchase Professional Liability.
What Does Professional Liability Insurance Cover?
- professional negligence
- loss of documents or data
- copyright infringement
- personal injury (defamation and libel)
- financial loss
In the event of any of the above PLI can provide coverage for:
- legal expenses and defence costs if the claim is taken to court
- compensation if damages are required to be paid to injured parties
- run off insurance if a claim occurs after a business ceases to be in operation
Overall, Professional Liability insurance is designed to help protect businesses and individuals from the costs from claims resulting in legal proceedings.
What Is Not Included in Professional Liability Insurance?
- historical claims, or claims made before the insurance policy was active (unless the policy has a retroactive date)
- bodily injury and property damage (this is usually covered by Commercial General Liability insurance)
- intentional acts (any deliberate acts or fraud)
- employment-related claims (anything usually covered under Employers’ Legal Liability or Workers’ Compensation)
- false advertising
- patents and trade secrets (any claim that alleges an infringement of a patent or theft of a trade secret)
If any of the above is required it may be possible to add them as extensions or as part of a larger comprehensive package, otherwise they will have to be bought separately.
Who Needs Professional Liability Insurance?
- business consultants
- IT consultants
- marketing consultants
- accountants and financial advisers
- chartered surveyors
- healthcare professionals
However, there are many other sectors that would also benefit from this coverage, including:
- teachers and tutors
- recruitment and employment professionals
- graphic and interior designers
- sports and fitness instructors
How Much Does Professional Liability Insurance Cost?
- the size of the business
- the size of the businesses/number of clients dealt with
- the potential costs if a claim is taken to court
- if the industry is regulated
But generally speaking there’s one simple rule: the larger the business, the larger the coverage required, which will also impact premiums and deductibles. If there are regulations on the industry, there will be recommended levels of coverage required for specific professions.
Typically coverage limits usually start for small businesses at $1m, while larger corporations may require $10m or more.
We spoke to Michael Loeters, Senior Vice-President at PROLINK, about what makes Professional Liability insurance so important