What is Professional
Professional Liability Insurance (PLI), also known as Professional Indemnity Insurance (PII), is
a type of Business Insurance designed to cover the liabilities of professional
and quasi-professionals. This Liability Insurance would cover the losses incurred from
Errors and Omissions while performing their professional services. Generally, Professional Liability Insurance could only cover financial losses suffered by a third-party person due to the insured's services. Therefore, any claims of personal injury and property damages are opposed to coverage. The most important reason for this exclusion is that these losses are covered under the Commercial General Liability Insurance.
Overall, having Commercial General Liability Insurance policies could help your small business
whenever an accident occurs inside your business premises. It can also cover any injuries or
liabilities resulting from your business's services. For better protection,
Get a Free Business General Liability Insurance Quote here.
Understanding Professional Liability Insurance
Having Professional Liability Insurance could help protect business owners against losses arising from common acts of negligence. This negligence includes acts of giving inaccurate advice that lead to its client's financial losses. Moreover, some coverage of this insurance provides coverage that could help pay for the claims following any privacy violations.
Generally, Professional Liability Insurance mainly focuses on professionals from the alleged
failure of performing its professional services that result in financial losses to clients.
Errors and Omissions Insurance (E&O) covers professionals that incurred a liability to its clients by the products or services the professional sold to its clients. This insurance usually provides for the defense cost of the insured. However, coverage for the defense cost for the grounds of criminal prosecution is not included.
Professional Liability Insurance experts divided Errors and Omissions (E&O) and Professional
Liability into three broad segments.
- Medical Malpractice Liability Insurance
- Non-Medical Professional Liability Insurance
- Executive Liability.
Professional Liability Insurance Coverage
Medical Malpractice Liability Insurance typically covers the acts, deeds, errors, and omissions of surgeons and physicians. Coverage of this insurance is usually provided on a claims-made basis with general limits.
- Physicians' Professional Liability
- Hospital Professional Liability
- Allied Healthcare Professional Liability
- Managed Care Professional Liability
- Long-Term Care
This policy could pay all the necessary costs on which the physician is legally obligated as a result of damages due to medical incidents. The underwriting agreements for this insurance policy refers to "medical incidents" rather than "bodily injury." Meaning this clause could cover a wide range of claims, including but not limited to mental anguish.
Usually, coverage for this insurance is written on a combined basis with
Commercial General Liability Insurance policies. In essence, to prevent "a gray area situations" in which coverage could be applicable for both policies. This insurance typically covers all physician employees of the hospital but restricted to independent contractor staff physicians —who are granted privileges.
This type of Professional Liability insurance is designed to provide coverage for non-physician healthcare professionals such as dentists, physical therapists, and other medical services professionals. Additionally, the underwriting forms for this insurance are usually written as similar to those that cover physicians. Also, Professional Liability Insurance for nurses is under this liability policy.
Managed Care Professional Liability Insurance provides protection to organizations including health maintenance organizations, which is mainly engaged in providing medical services. Claims covered by this insurance include denial of treatment, which is legally wrong, direct professional liability, and accusations of selecting providers carelessly.
Long-Term Care Professional Liability Insurance covers professionals that provide long-term care, including nursing home care. Coverage is typically comparable with Hospital Professional Liability policies since the settings and the services they provide are both similar.
Non-Medical Professional Liability is generally designed to cover Acts of Errors and Omissions of Nonmedical Professionals, including lawyers, architects, and accountants. Semiprofessionals, such as computer consultants and real estate brokers, are also covered. Other professionals including but not limited to insurance agents, Webmasters, media professionals, bankers, and environmental consultants are also applicable to coverage.
Executive Liability Insurance covers the loss exposures that could be faced by officers and directors and other business entities. This could cover losses arising from management activities, finance, and benefits.
- Directors and Officers (D&O)
- Employment Practices Liability Insurance
- Fiduciary Liability
This insurance policy provides coverage for corporate Directors and Officers (D&O). It could cover claims of negligence that were filed by its employees and stockholders. The most common complaints were alleged financial losses due to mismanagement of financial resources.
Employment Practices Liability Insurance (EPLI) covers the wrongful acts arising from an individual's workplace or employment process. The most frequent claims that are applicable for coverage include discrimination, wrongful termination, and sexual harassment. Additionally, this policy is also available as an endorsement to the business's existing D&O policy.
This policy provides protection to an individual's liability, who is responsible for administering and managing an employee's benefit plans. This insurance pertains to cover employers, trustees, professional administrators, fiduciaries, and the plan itself. As imposed on the Employee Retirement Income Security Act (ERISA), the benefit plan of the employees and its beneficiaries has to have a higher than standard care.
- Previously Performed Services
- Defense Cost
Previously Performed Services is a type of coverage that could cover claims from the completed services of the insured professional. However, claims must be made on the policy's retroactive date for the coverage to apply.
Every business owner who holds a policy of Professional Liability Insurance could benefit from the cost of defense. This coverage includes hiring a lawyer or legal practitioner to defend the insured on the court. Moreover, this could provide for the court fees, and other costs to file the necessary paperwork.