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What Does Professional Liability Insurance Policies Cover? - Liability insurance

What Does Professional Liability Insurance Policies Cover?

August 7th, 2014

By now, you probably know what a professional liability insurance policy is. Quite simply, this type of policy is bought by professionals looking to safeguard the future of their profession against the constant threat of lawsuits. As an example, a health provider can be accused of medical malpractice if he or she prescribed the wrong dosage of medication to a patient. If the latter can prove professional negligence—and that they were harmed as a result of it—then the possibility of them filing a lawsuit against the healthcare provider is very high.

If the health provider in question is not able to prove their innocence—and if they are not covered under a professional liability insurance policy—then the lawsuit has the potential to leave them financially ruined for a very long time.

So that’s right: This type of coverage protects professionals from financial loss associated with a lawsuit. But what exactly does this policy cover and what does “financial loss” mean? Even more importantly—do you have to be innocent to profit from this type of coverage?

The answer is no. A professional liability insurance policy protects you, regardless of whether you were at fault or not. Once the deductible has been paid to your insurance company—or in other words, the amount of money that you agreed to pay before the company is able to reimburse your claim—the latter will take care of every fee associated with the lawsuit. This includes the defense fees as well as the settlement that has been ordered by the court. So that’s right: You won’t have to worry about hiring a lawyer to defend you. Your insurance company will take care of that. What’s more, the lawyer will work closely with you and do everything in their power to prove your innocence—assuming that it is the case, of course.

It is good to note, however, that certain policy won’t cover you for mistakes that you might have done in the past and which led to someone to file a lawsuit against you. It is always a good idea, therefore, to spend time reading the details of a policy before buying it, and to consult with your insurance broker on a regular basis.