Professional Liability Insurance (PLI) or Professional Indemnity Insurance (PII) provides peace of mind for professionals in diverse fields, such as medicine, engineering, and architecture, against unforeseen complications related to their profession.
Unexpected difficulties can arise for every professional, including physicians who treat patients, lawyers, consultants who help us advance in our professions, and architects who design our skylines. A disgruntled client might allege a missed deadline, or a dissatisfied customer might claim negligence. These situations, while stressful, need not derail your professional journey. PLI, also known as Errors and Omissions Insurance, covers the financial burden of settlements and legal defence.
Let’s delve into the core concepts of Professional Liability Insurance (PLI), including what it shields you from, its coverage, and the value it provides for your professional practice. You may be a seasoned professional or just starting your career, but understanding the specifics of PLI empowers you to make the right decisions and successfully proceed on your professional path.
Professional Liability Insurance is a policy created especially to support professionals financially and legally in the event of a legal situation.
For example, medical professionals can take advantage of Professional Liability Insurance coverage if they make an unintentional professional mistake with their patients. It can shield against claims that are a result of unintentional errors and usually covers expenses related to the following circumstances:
Legal fees for damages or settlements as decided by a court of law
Medical malpractice allegations or legal suits
Claims for breach of confidentiality
Loss of third-party documents and cost of replacing them
A working or practising individual with a professional degree in medicine, engineering, law, accountancy, etc.
Architects, real estate agents and brokers, insurance agents, consultants, financial advisors, and other professionals
Specialists in their field, like research officials, academics, scientists, and others
Individuals associated with an organisation or owning their own business or practice
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The following is a list of inclusions and exclusions of a PLI Policy:
Inclusions
Legal fees and expenses incurred while investigation under legal liability
Representation cost in a court of law
Compensation for claims because of death caused by error or bodily harm
Omission and negligence while offering professional advice or services
Exclusions
Fines and penalties
Punitive and exemplary damages
Pure financial losses
Violation of law or ordinances
Criminal acts
Professional services under the influence of narcotics and intoxicants
Liability due to purely cosmetic procedures (medical)
The following factors must be considered when looking to purchase a Professional Liability Insurance Policy
Premiums
Professionals should compare insurance policies, their scope of coverage, and premiums before deciding on a PLI. A lower premium may seem lucrative, but it often comes with less coverage. A premium depends upon an individual’s or an organisation/firm’s risk-bearing capacity. Underwriters consider areas of practice, geographical location, billed work, claim history, and several other factors when determining premiums.
Policy Limits and Deductibles
Insurance companies fix the amount they will spend to defend covered claims after all evaluations and checks, known as policy limits. Deductibles and policy limits also depend upon the claim history of the policyholder and the aggregate limit during the policy period. The policy limit is set when you buy the PLI. Always check with your chosen insurer for clarity.
Coverage and Exclusions
Coverage and exclusions are significant because they directly affect your claim. It is crucial to take some time to read the policies of leading insurers and choose a comprehensive Professional Liability Insurance plan.
Company/Organisation Coverage
Several Indian and foreign MNCs, hospital chains, and other organisations offer Professional Liability Insurance to their employees to shield against disputes. In such cases, the organisation pays premiums and operating expenses, handles settlements and verdicts, and more. If you are associated with an organisation, check your company policies about PLI, coverage, and exclusions.
It is important to remind ourselves that we may make mistakes unintentionally, and subsequent claims can have severe repercussions on our professional practice and careers. These also hold the potential for significant financial ruin and reputation. It is advisable to shield yourself against unforeseen risks associated with your field of work. Make sure to research and understand your chosen policy’s terms and conditions so you can focus on what you do best and let your insurer manage the complexities of insurance.