What is Professional Liability Insurance?
Personal liability insurance protects professionals such as lawyers, doctors, accountants and real estate professionals against negligence and other claims from their clients. Any professional who has expertise in a specific area warrants this kind of insurance because general liability insurance doesn’t offer protection against claims of negligence, misrepresentation and malpractice brought forth by clients.
Professional liability insurance also is called medical malpractice for those in the medical profession and errors and omissions insurance for real estate agents. Professional liability insurance is a specialty coverage that is not covered under in-home business insurance policies or business owners’ insurance policies. A typical professional liability insurance policy will guard against a loss arising from any claim made during the policy period. These claims include error, omission and negligence and are filed by the client and are against the professional.
Professionals use professional liability insurance to protect themselves against claims of negligence from clients. But there are limits to the coverage. Professional liability insurance only covers claims made during the policy period for the insurance. Incidents made before the coverage period will not be covered, unless otherwise stated in the policy. Some professional liability insurance policies have retroactive dates. So check to see if this type of retroactive date applies to the policy that you purchased. If it does, you will have liability protection from your insurance prior to the policy period.
What’s Covered, What’s Not Covered with PLI
Professional liability insurance covers claims of negligence, violation of good faith and fair dealing and inaccurate advice and misrepresentation. And depending on the terms of the policy, a professional liability insurance policy may cover privacy violations. Professional liability insurance does not cover criminal prosecution and it does not cover forms of legal liability under civil law.
The aim of having professional liability insurance is to keep your company in business. Professional liability insurance can help cover the legal costs of mounting a defense after a negligence or other claim is made by a client.
Medical malpractice is defined as an act or omission by a medical professional in which the treatment provided falls below the standard of care and results in the injury or death of the patient. Having medical malpractice insurance can offset the cost of malpractice lawsuits for medical providers such as physicians, dentists, nurses and physical therapists.
Coverage for Professional Business Owners
Professionals that operate their own businesses need professional liability insurance on top of any in-home business policy or business owners’ policy. Professional liability insurance protects business owners from losses due to lawsuits filed against them by their clients.
Cost of Coverage
The median annual cost of professional liability insurance is about $60 a month or $720 a year. So professional liability insurance coverage can be affordable for professional doctors, lawyers, accountants or real estate professionals.
Just how much you will pay for professional liability insurance depends on a number of factors including the type of business, location of the business, size of company, number of employees and number of clients, years in business and claims history. The policy coverage limits are a factor as well, as are other policy terms such as whether or not the policy has a retroactive period. And in many states your credit score may affect the rate you pay on professional liability insurance.
How to Lower Costs of Professional Liability Insurance
Looking for ways to lower the rate on your professional liability insurance? Here are some tips.
Have a clean claims history. If you have a squeaky clean claims record when it comes to professional liability claims from clients, you’ll pay less for professional liability insurance.
Choose a high deductible. As with any other insurance coverage, opting for a high deductible will lower your coverage cost and it is one way to nudge down the cost of professional liability insurance.
Have strong quality control. Having a strong quality control process will catch errors before they reach clients, sparing you claims and customer complaints.
Have a good credit score. In many states credit scores are used in the pricing of insurance rates. People with good credit scores are considered good risks for insurance and pay less in insurance rates. Having a great credit score will help to lower the rate you pay for your professional liability insurance coverage.
What You Need for a PLI Quote
When reaching out to an insurance company for a professional liability insurance quote, you will need to have a few documents at the ready.
You’ll need copies of contracts, information on quality control processes and any information you have on previous professional liability insurance.
Once you get a quote for coverage, don’t stop there. Shopping around for the best deal is a good strategy. So shop around until you find the best coverage. Once you do, you will rest easy knowing you have the professional liability insurance coverage that you need at the best price.
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Often, costs take on a life of their own and begin to really eat away at profits if you don’t take care to control them. Sometimes, a business’s inner workings can become so complicated that we overlook the simple and obvious changes we can make to improve our business practices. “A penny saved is a penny earned” could not be any more true.
Most businesses have general liability insurance because accidents happen. They happen even more the bigger your company is.
If you are a business owner, you will need to make sure that you have an adequate amount of business insurance to protect both your personal and business interests.
Quick and easy tips that every business owner should be doing.