As a professional, you are always at risk of being sued for negligence, even if you have done nothing wrong. Professional liability insurance (PLI), also known as errors and omissions (E&O) insurance, can protect you financially if you are sued for damages arising from your professional services. It can also help pay for your legal defense costs. Here are five things you need to know about PLI.
Limits of Insurance and Deductibles
Professional liability insurance policies have limits, meaning that the insurer will only pay up to a certain amount for damages or losses. The policy limit is usually stated in the policy contract. In addition, most professional liability insurance policies have a deductible, which is the amount of money that the policyholder must pay out-of-pocket before the insurer will start paying for damages or losses. The deductible is also usually stated in the policy contract.
Contractual Service To Your Clients
You are obliged to provide a safe and professional service to your clients. If you breach this agreement and your client suffers damages, they will likely sue you for breaching the contract. It is important to have professional liability insurance in order to financially protect yourself in the case of a lawsuit. This type of insurance will also cover you for any damages that may arise from wrongful advice, omissions in your work, or even defamation. If you need more information about professional liability insurance, you can visit https://apollocover.com/business-insurance/professional-liability-insurance/ for more details. This will ensure that you are well protected against any legal action that may be taken against you.
Defense Costs and Legal Representation
Most importantly, your professional liability policy will pay for the cost of defending you in a lawsuit, even if the allegations against you are groundless. This coverage extends to any required legal representation, including depositions and hearings. It’s important to have a clear understanding of what is and is not covered by your professional liability insurance policy. The last thing you want is to be caught off guard by an excluded expense.
Claims Made Forms and Retroactive Dates
Professional liability insurance policies are most commonly written on a “claims made” basis. This means that the policy will only cover claims that are reported to the insurer during the policy period – even if the professional services that gave rise to the claim were performed prior to the inception of the policy.
Most policies have a “retroactive date” that goes back to the beginning of the professional’s career, or sometimes to the date when the business was founded. Any claims that arise from professional services performed prior to the retroactive date will not be covered by the policy.
Previously Performed Services
If a company is sued for something that happened in the past, even if it’s no longer providing that service, its professional liability insurance will still cover the costs of defending the lawsuit. It’s important to note, however, that the policy will only cover damages that are awarded as a result of the lawsuit; it will not pay for any settlements made outside of court. This is why it’s important to have insurance that covers your current activities, as well. The last thing you want is to be caught without coverage for something you’re no longer even doing.
Professional liability insurance is a type of insurance that can protect you from financial damages if you are sued for negligence. It is important to understand the coverage that your policy provides, as well as the exclusions and limitations. You should also be aware of the different types of professional liability insurance, such as errors and omissions insurance and malpractice insurance. Professional liability insurance is an important part of protecting your business, so make sure you have the right coverage in place.