Liability insurance

Things you need to remember

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.

What Does “Adequate” Professional Liability Insurance Coverage Entail?

May 23rd, 2014

When shopping around for the perfect professional liability insurance policy, it is a good idea to look at the various options available to you. As a professional, protecting your future by insuring yourself is always a wise idea—but so is ensuring that the coverage that you buy is able to meet your needs adequately.

When people buy a policy, they think that they will automatically be covered for everything that they need… without having to do their homework. The truth is that policies tend to differ from company to company. As a buyer, you must spend some time reading the details of a policy and even go as far as discuss it with your insurance broker to make sure that you are on the same page.

With that being said, what exactly does “adequate” professional liability insurance coverage entail? You first have to see if the policy covers everything that you do in your profession. You also have to remember that it is not uncommon for people to stray beyond their original profession during the course of their work. If you purchase a professional liability insurance policy for your main profession, you should ensure to have additional coverage as needed.

The next thing that you will have to do is research whether the defense costs are included in the policy. We don’t recommend buying a policy that do not include the defense costs as the latter can be very costly. Prevention truly is the key: Even if you find yourself having to pay higher premiums (and a higher deductible), those two combined are still better than the defense fees that you would have to pay in the event of a claim.

When shopping around for the best professional liability insurance policy, you should also always double check that the coverage is not exclusive to your country only—especially if your profession involves working with clients from foreign countries. Lastly, you should also consider whether the policy has a retroactive exclusive date. If it is the case, then you might find yourself in trouble down the road when someone files a claim against you for an error or omission that occurred before the retroactive date. No matter how unlikely this might sound, it is not uncommon for people to file a lawsuit against a professional for work that was done years ago.

We always recommend that you discuss those points with your insurance broker, particularly if you are thinking of switching insurance company.