What is Professional Liability Insurance?
A General Definition
If you are in a professional job, such as a doctor, lawyer, architect, or accountant, then you will, no doubt, need liability coverage. Professional liability insurance, also known as professional indemnity insurance, is designed to cover a professional person against any alleged negligence in the execution of his duties. Besides the aforementioned occupations, professional liability insurance or professional indemnity coverage also protects individuals working in the fields of engineering, education, and a variety of consulting and medical jobs, including nursing, physical therapy, respiratory therapy, and occupational therapy. In order to obtain adequate coverage, it’s important to know the professional services that are covered by a particular policy.
The Retroactive Date
When you are considering the purchase of professional liability insurance, you will, in all probability, come across the term, retroactive date. The retroactive date refers to the date that the insurance coverage was initiated. Therefore, any claims arising from professional services performed before the retroactive date are not honored by the policy. As long as you renew your insurance, you won’t lose any coverage that is related to incidents happening after this date.
Keep your Coverage In Force
If your professional liability insurance is a claims-made policy, then any claims arising from services performed after the retroactive date are covered. However, if the policy is not renewed, then you lose the benefit. Therefore, if you choose to buy a claims-made policy, make sure that you do not allow your coverage to lapse.
Exclusions
Therefore, when it comes to exclusions, professional liability insurers will not normally cover claims that are made with regards to incidents that happened prior to the retroactive date. In addition, they will not reply to claims against a company or business that is not listed in your plan. Make sure then that you include all the companies with whom you are linked and to whom coverage applies. In addition, professional liability insurance will not cover any claims made that are not professional in nature, such as poor workmanship, payment disagreements, and breach of contract. The insurance only covers you against litigation resulting from job-related duties.
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