Professional Liability Insurance – Why It Is Important?
Professional liability insurance, sometimes called professional indemnity insurance but most commonly understood as professional liability insurance in the United States, is a type of liability insurance that protects professional parties from claims by other professionals. Professional liability insurance protects companies, employers, and professional individuals who take advantage of their clients, deal with them, provide services to them, or give advice to them. It is necessary for all companies that provide professional services to be licensed and follow the laws and regulations set by state and federal agencies. Professional liability insurance is a way to limit the losses and costs incurred due to negligence and professional malpractice.
The main aim behind any type of insurance policy is to protect an insurance provider’s investment. Since most businesses are at times run on a tight budget, a major concern of the business owner is the cost of insurance premiums. Professional liability insurance is very important because it can help to save money in both the short and long term. Professional indemnity insurance covers a wide range of services including general liability, professional negligence, errors & omissions, missed medical expenses, property damage, and miscellaneous litigation expenses. The types of services covered can vary but the main aim behind these policies is to keep the business owner safe from claims made by clients for negligence or mistakes made by the professionals during work.
Why It Is Important?
A professional liability policy typically includes two major sections, namely, professional liability protection and professional indemnity. The protection provided will depend on what kind of professional liability policy one gets. In most states, liability coverage will come with civil law and criminal prosecution as a standard clause. Civil law will cover damage done to a customer or client while criminal prosecution will apply to the same harm done to a government official or individual acting in an official capacity. A good professional liability policy will therefore include both civil and criminal prosecution and medical payments coverage. However, this is not always the case and one should shop around to get the best policy at the best possible price.
Professional indemnity insurance covers legal costs for injury claims made against a business. In fact, professional liability insurance covers all legal expenses, even if the court does not charge for the damages. This protects clients who make mistakes while making claims and prevents them from having to foot the entire legal bill. For instance, an employee might accidentally injure himself while at work and so file a personal injury claim. However, if the employee does not have the necessary coverage, he may not be able to get compensation and will have to bear the entire cost of the legal expenses out of his own pocket. Thus, legal expenses become a very large part of any company’s budget and professional liability insurance covers this entire expense.
Claims related to negligence are also covered under professional liability insurance. When a person has suffered some kind of damage or loss because of the negligence of another person, he or she may submit a claim for that loss or damage. However, before the insurer agrees to cover the claim, it will look into all the possible factors that led to the occurrence of the negligence. If the company finds negligence on the part of the other party, it may either deny the request for compensation or try to reduce the compensation amount. In such a situation, it becomes imperative for clientele to maintain close relations with their insurance company in order to receive the maximum amount of compensation.
Sometimes clients find it difficult to get hold of their insurance company. For instance, if they were involved in a car accident, the damage may be covered by their professional liability insurance. However, if the damage was caused due to the client’s negligence, the insurance company may not provide coverage. Therefore, it is necessary for clients to seek professional legal advice, before submitting a claim or accepting any settlement. The lawyer can explain the legalities of professional liability insurance and help a client understand whether they will be fully protected under the policy or not.
Clients should not assume that hiring a professional liability insurance will mean total protection. It is very important for the client to know about the various types of policies offered by the company and how each type of policy differs from the other. In addition, they should know about the different types of liabilities that are covered under a professional liability policy. While the particular policy that covers a client sues an individual, the insurance may also cover the professional or institution that was sued.
The above mentioned are just some of the numerous reasons as to why the need to keep close relationships with the insurance company that insures our business arises. When clients make claims against a company or professional, it is essential for them to maintain close relations with their professional liability insurance provider in order to receive the maximum compensation in case of a lawsuit. The nature of claims made against a business or organization will determine whether the company or organization should provide compensation or not. For instance, claims made because of medical malpractice will need to be backed by medical malpractice insurance. Similarly, a person making a claim against a firm or organization will need to have LPL coverage.