Professional Liability Insurance

Reviewed by Apoorva | Updated on Aug 27, 2020

What is Professional Liability Insurance?

Professional Liability Insurance (PLI) refers to the insurance that provides coverage to professionals, such as lawyers, physicians, accountants, and others, against the claims initiated by their clients for causes, such as negligence, misrepresentation, or malpractice. Professionals with expertise in some areas require professional liability insurance because other liability insurance policies do not provide the necessary protection against claims that arise from professional practices.

How Does it Work?

The name of professional liability insurance varies based on the profession for which it is applicable. In the medical profession, the insurance is called malpractice insurance. For real estate agents, it is called errors & omissions insurance. Professional liability coverage is not available with the usual homeowners' endorsements, in-home business policies, or business-owners' policies.

Such insurance policies are arranged based on the claims made, i.e. the coverage is good only for the claims made within the coverage period. The policies, typically, compensates the insured for losses occurring from the claims made during the policy period. Those incidents that had occurred before the activation of the coverage period may not be covered. Some policies may even come with a retroactive date.

Exclusions

  • Criminal prosecution
  • All legal liabilities applicable under civil law
  • Cyber liability, ranging from a data breach to other tech issues

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It is not uncommon for medical professionals to face the threat of lawsuits for alleged medical malpractice. Medical malpractice can be an act by a medical professional where the medical treatment provided by him/her falls below the standard of care, resulting in a serious health condition or death of the patient.