What is Professional Liability Insurance | Benefits & Cost

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Your limited liability company will need insurance like general liability insuranceworkers’ compensation insurance, and professional liability insurance. On this page, we’ll answer the questions: what is professional liability insurance and how does it benefit you?

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How Much is Professional Liability Insurance

How Much is Professional Liability Insurance? Buying the insurance for your business may be a daunting task, but if you understand the basics you can get the best coverage for the lowest cost. Premiums for professional liability insurance vary according to industry and type. Building design and construction businesses tend to pay higher premiums, since the costs of making a mistake on a construction site can result in injury or financial loss to a client. Media and advertising businesses also tend to pay high premiums, since their work directly impacts the bottom line of their clients.

The cost of professional liability insurance depends on several factors, including the industry you are in, the amount of revenue you generate, and the claims history of your business. Generally speaking, a small business can expect to pay anywhere from $500 to $1,800 per year for professional liability insurance, but there are exceptions. For example, low-risk professionals can expect to pay less than $1,500 per year for coverage. The coverage limit will also play a role in the premium amount. A policy will have a maximum limit per claim or a maximum amount for the entire year.

Depending on the industry, the amount of coverage you need for your business can range anywhere from $250,000 to millions of dollars. As the cost of professional liability insurance will increase over time, you may need to make a few adjustments to your coverage. A higher coverage limit is better for smaller businesses than higher-risk ones. However, you should consider the cost of a policy against the cost of a lawsuit if your business becomes involved in a serious accident.

What Is Professional Liability Insurance?

Also known as PII (Professional Indemnity Insurance), the PLI or Professional Liability Insurance is designed for consultant organizations or individuals against any lawsuit filed by the client regarding the financial loss. Commonly called “errors & omissions” or E&O, PLI is helpful for professional services and advice providers or companies that are often trapped with a civil lawsuit and negligence claim by the client.

While covering the negligence claim, the insurance will give protection by focusing on the alleged loss or failure of the client due to any omission or mistake done by the consultant within the policy period. The intellectual property and other confidential data are safe with the PLI company while it analyzes everything.    

Who Needs Professional Liability Insurance?

Liability insurance policy is beneficial for various business or service providers, namely architects, counselors, brokers, financial professionals, designers, IT developers, and so on. You can either go for a professional insurance cover or contractual clause issued by the clients to have liability insurance for working within the policy period.

If the business requires direct dealing with the customers, having a PLI is crucial as customers might make a claim out of their perspective even though there is no error on your side.  

How Does Professional Liability Insurance Work?

Professional Liability Insurance comes with an array of features that are beneficial in different case scenarios of the applicable policy period. The key features are –

Eligible for All Professionals

Be it medical practitioners and professionals or management consultants, chartered and financial accountants or advocates, engineers and architects or designers –the PLI-covered claim is applicable to almost all the professionals as per the laws of a specific insurance company.

Extensive Coverage

The professional liability policy will cover all legal liabilities due to omissions insurance, errors, and negligence while providing professional services that result in any loss or injury to the third party or damage to the property. In this context, you should also know that the insurance will only cover any claim made during the policy period and not after that.

Group Policies Granted

A professional Liability Coverage contract is also compatible with more than one person from the same company or profession. What is better, group policies come with discounts according to the number of people in that group. This will help the business owners to pay for legal liability expenses, property damage expenses, and so on.

Expenses for Defense

During your legal defense in the court against alleged errors and professional errors, the PLI will cover the fees and additional charges by paying out of your insured sum. You do not have to bear any expense for defending yourself at the court, thanks to different policies like medical malpractice insurance, defense costs, liability insurance cost, and so on. 

In Conclusion

Professional Liability Insurance is needed if you have a business. You cannot say when and how your clients can file a lawsuit against your business. In that case, if you have PLI then you might be able to cover the damage to your business. This article has explained professional liability insurance and how is it beneficial for your business.

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