For any business that offers professional advice or services to customers, such as law firms, financial advisors, real estate brokers, or accounting, the risk of a negligence claim is something these businesses must prepare for. In order to manage the risks associated with a lawsuit or claim of professional negligence, professional liability insurance is a smart choice. This specialized form of insurance helps to provide coverage against claims, protecting business and personal assets.
What is Professional Liability Insurance?
Professional liability insurance (PLI) is an important type of insurance coverage designed to protect against claims that a professionally-oriented service provided by a company caused someone to suffer financial loss or harm due to the mistakes or omissions made by the company or its employees. This insurance is sometimes referred to as professional indemnity insurance, or more common errors and omissions (“E&O”) insurance.
PLI policies cover the costs associated with legal claims, such as in individual or class-action lawsuits, including legal fees, settlements, and damage awards. This coverage protects a professional advice or service company even if the lawsuit is without merit – even frivolous lawsuits can cost thousands or even millions of dollars in legal defenses. Some of the common claims associated with PLI coverage include:
- Violation of good faith
- Inaccurate or false advice
- Unfair dealing practices
- Violations of privacy
What Businesses Can Benefit from Professional Liability Insurance?
There are many types of business that utilize the protection of professional liability insurance policies. Typically, these businesses perform a service or offer professional advice, such as law firms and financial planners, stockbrokers, and investment advisors. Some of the other businesses that take advantage of PLI coverage include:
Technology professionals – PLI can protect tech companies from the losses associated with lawsuits and settlements. When technology services or advice fails, a business using those services can lose significant amounts of money and even lose business opportunities of their own. Software developers, IT firms, electronics manufacturers, and hardware vendors can all benefit from PLI.
Real estate professionals – whether you are a real estate broker, a realty investment advisor, or a home inspector, the risk of a legal claim against you can be significant. PLI policies protect against the losses associated with negligence or errors/omissions in the performance of services and the advice given to clients.
Entertainment industry professionals – there are many potential risks associated with production of entertainment – film, television, and live events — such as copyright infringement, breach of confidence, privacy rights violations, and intellectual property loss, to name only a few. PLI policies are designed to protect against these risks, and can include all aspects of an entertainment production, including producers, directors, performers, and equipment.
Choosing the Right PLI Policy
If your business provides professional advice or services, PLI policies can protect your hard-earned assets from losses arising from legal claims against your company and its employees. Finding the right policy to cover your potential risks requires the assistance of an experienced insurance agent. Insurance agencies specializing in this form of business-oriented risk management solution have the experience and understanding needed to find the right policy and the appropriate coverage for potential risks. Speak to your business insurance professional today to learn more about the valuable asset protection professional liability insurance offers to businesses.