What Is Professional Liability Insurance?
A type of business insurance product aimed at those who sell knowledge and their own skills and abilities, professional liability insurance is also known as professional indemnity insurance or PI.
What's covered? Should you be found to have made a mistake or acted negligently, professional liability insurance can provide cover against the clients damages and losses and potentially any damages and losses to a third party. PI insurance may be able to cover some or all of your legal fees as well as covering the main amount owed. For certain professions and industries it is essential to secure this policy, either as a legal requirement or so they can gain access to the profession. This includes solicitors, financial service consultants, architects, accountants and several others.
Changing insurers or retiring If your policy is not live, you probably won't be covered. This means that if your policy has expired or if you've retired, you may not be covered for incidents that have occurred in the past when your policy was live. It can also mean that if you're switching insurers, you might not be covered for incidents that happened when you were covered under a prior policy. So if you switch provider, you might wish to consider getting "run-off" coverage from your prior insurer or make sure your new insurer will cover historical claims.
Paperwork To help minimise or eliminate claims, it is recommended that complaints are dealt with in a timely but satisfactory manner, or possibly securing a contract that can help to cut down on certain areas of risk. If appropriate, consider contractual protection, bearing in mind that there are legal restrictions on businesses limiting their culpability contractually.
How much cover? When negotiating with a new client, they will often provide direction on how much cover you should take out. It is generally required by the government that freelancers and companies are covered up to a minimum of 5 million.
What's covered? Should you be found to have made a mistake or acted negligently, professional liability insurance can provide cover against the clients damages and losses and potentially any damages and losses to a third party. PI insurance may be able to cover some or all of your legal fees as well as covering the main amount owed. For certain professions and industries it is essential to secure this policy, either as a legal requirement or so they can gain access to the profession. This includes solicitors, financial service consultants, architects, accountants and several others.
Changing insurers or retiring If your policy is not live, you probably won't be covered. This means that if your policy has expired or if you've retired, you may not be covered for incidents that have occurred in the past when your policy was live. It can also mean that if you're switching insurers, you might not be covered for incidents that happened when you were covered under a prior policy. So if you switch provider, you might wish to consider getting "run-off" coverage from your prior insurer or make sure your new insurer will cover historical claims.
Paperwork To help minimise or eliminate claims, it is recommended that complaints are dealt with in a timely but satisfactory manner, or possibly securing a contract that can help to cut down on certain areas of risk. If appropriate, consider contractual protection, bearing in mind that there are legal restrictions on businesses limiting their culpability contractually.
How much cover? When negotiating with a new client, they will often provide direction on how much cover you should take out. It is generally required by the government that freelancers and companies are covered up to a minimum of 5 million.
About the Author:
Betty Friggott writes on a range of business related topics, including professional liability insurance .