Professional Liability Insurance Is The Cost Of Doing Business

Professional liability insurance, or professional indemnity, covers an individual against legal claims made against him or her as a result of professional activities. Different kinds of insurance for different professions may be called by a variety of names. Doctors are the most well known holders of this coverage in the form of malpractice insurance. Lawyers, notaries public, real estate brokers and appraisers, technology developers and engineers also frequently carry plans. In the case of legal fees including court costs and potential settlements, this insurance provides funds and often legal representation for clients.


The necessity for professional liability insurance increases in certain professions, anyone who interacts with the public or offers them a product runs the risk of being processed for anything from negligence to unfulfilled promises. In the United States, a precedent has been set for huge court settlements in favor of individuals seeking damages against professionals. Given this climate, any professional engaging in activities that involve risk of error are often well served by this kind of coverage.

Professional liability insurance offers coverage above and beyond that of general liability insurance. General plans come into effect in cases of personal injury, property or advertising damage. Many legal claims against businesses or professionals do not fall into these categories and therefore require a specialized kind of insurance. Examples include charges of negligence, inaccurate advice, or violation of good faith.

Most policies of this type are offered on a term basis meaning that an owner is only covered as long as he or she maintains the policy. Canceling the plan will preclude a former client from making any claims to the insurance company. Regardless, indemnity insurance is often considered to be an important part of doing business. In case of a legal dispute, taking precautions can end up being far cheaper than facing out of pocket court fees.

The increase in the number of freelancers in recent years has seen an increased interest in indemnity insurance for that field. Because they are not protected by any company or organizations, freelancers are vulnerable to claims made against them for mistakes, omissions, or oversights. An individual working alone is more likely to commit an occasional error. Professional liability insurance can be an important safeguard.

There are many kinds of plans that cover the spectrum of coverage and cost. Basic coverage individual plans can be as cheap a $100 to $200 per year while bulletproof professional coverage can cost thousands. Companies can offer high payouts for relatively small premiums because many clients will never receive a benefit. Any professional whose work with the public offers the risk of error will want to consider professional liability insurance. In today’s litigious society, liability coverage is part of the cost of doing business.

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