PLI is necessary, but it can be confusing. What’s covered? What isn’t covered? How do you use it? Here are some important facts about professional liability insurance.
1. Professional liability is not the same as general liability
General liability refers to the policy that most professionals keep active should bodily or personal injury or even damage to property occur while running a business. For example, if the unmarked slippery floor of your lobby leads to a client’s fall and that client decides to sue, your general liability coverage would protect you.
Professional liability, on the other hand, covers the actions, advice, mistakes, and/or omissions of the professional themselves. This policy comes into play if a client files a lawsuit alleging that the professional’s advice has led them to misfortune.
2. PLI is used in many industries
While many consultants and brokers rely on professional liability insurance, they aren’t the only ones. In fact, doctors and lawyers also use these policies to protect themselves under the title “malpractice insurance” for doctors and “errors and omissions” for lawyers and other service professionals. Other professions that benefit from PLI include:
- Financial Advisers
- Real Estate Brokers
- Technology Consultants
3. Professional liability insurance is widely used for civil suits
When a lawsuit is filed, there are many costs associated. Paperwork filing fees to attorney costs and even damages that must be paid out to the client — should they win the case — are just a few of the expenses that a defendant is expected to pay. PLI can help diminish the financial impact of each during a civil suit.
4. PLI will not apply to criminal prosecution
If the lawsuit evolves into a criminal investigation and trial, professional liability insurance will not apply. PLI strictly applies to civil suits. Additionally, PLI doesn’t cover cyber liability, so if you work in the tech industry, it’s smart to add cyber liability insurance to your policy.
5. Policies can be confusing without a professional
Legal and insurance jargon are bewildering. It’s important to work with an experienced insurance professional or broker so they can help you navigate the ins and outs of these policies , ensuring you have the right coverage to keep you and your business protected.
6. Coverage can apply to both you and your company
If you find your company is targeted by a lawsuit, it’s a little easier to relax— after all, you trust your legal team to handle the case. But what if a client goes after you personally for advice you had given in the past? Fortunately, PLI covers both you and your company, so your personal and company assets are safe.
7. PLI only works with an active policy
Professional liability insurance operates under two conditions:
- You must have coverage at the time of the claim’s filing.
- You must have active coverage during the time of the incident as well.
It’s best to maintain consistent coverage to keep yourself and your business protected at all times.
8. There are two types of professional liability coverage
PLI requires active coverage during the time of the incident and the time the claim is filed to apply. This professional liability type is called “claims-made.” The other, “occurrence,” is used to protect you in the event that a lawsuit is filed regarding an incident that occurred while you were previously insured, but no longer are. This coverage primarily applies to those who are retired or have switched careers.
9. Professional liability is not one-size-fits-all
When it comes to coverage and policy size, professional liability should be customized to the needs of the individual. For instance, a dental surgeon may need a large PLI (or malpractice insurance) policy, whereas a dental assistant will need significantly less. It all depends on the size of the professional’s responsibilities and range of service.
10. It’s easy to find the right coverage
When you work with Cherokee Insurance Center, you can rest assured your insurance needs are in good hands. We are industry-leading experts. We pride ourselves in taking the confusion out of professional liability insurance while ensuring you get the proper coverage to protect yourself and your business.