Insurance is turning to be a must need in today’s life. We see various types of insurance that cover our life and assets. There are many kinds and types of insurance that we see in our daily lives. Professional liability insurance is one of such kind of insurance that is issued by and for people who are engaged in professional jobs such as lawyers, accountants, doctors, etc. It is commonly known as errors & omissions (E&O) in the United States.
As a professional, one who is an expert in a particular field is expected to perform, and the society demands him/her perform his work in a highly competent manner. However, to err is human, one can stand the risk of being exposed to any act of negligence at any time. Depending on the work performed by the professional, one has to go through and across several stages of work. Due to the nature of the work they are performing, there can arise several faults. In those conditions, the professional liability insurance is a must for the professionals. Professional Liability insurance covers the wrongful acts and omissions that the insured people commit and provides the necessary claims that the insured is entitled to. This can be used by wide range of professionals ranging from architect to lawyers. For example, the doctors can use the cover for their private practice and hospitals. In those cases, the medical professional liability insurance protects the health service provider against all claims made by the patient that arise due to the negligence of the medical practitioner. The insurance issued to the medical practitioner is called malpractice insurance.
For the entitlement of the professional liability insurance, there must be a breach of duty or harm or wrongful act by the professional first. They must have committed the wrongful act against the client. This act can be because of anything such as negligence or error. Once, if they perform such an act and if the client sues them for such act, these professionals can get the professional liability insurance if they are under the coverage of it. The coverage only arises during the period of the insurance. That is, the wrongful act must be performed during the coverage period and no claims brought before or after the period of insurance are not entertained. But in certain cases, certain policies will have radioactive dates, in such cases, the acts are covered even outside policy dates.
It is to be noted that the coverage does not include criminal prosecution. If the act done by the professional come under such act, then they are not covered by the insurance policy. The same is applicable in the civil law too, unless it is specifically mentioned in the policy. It is to be noted that this insurance is not a substitute for general insurance. Under professional liability insurance, one cannot sue the same person working in the group. Also, the damages do not include the fine levied by the state or any federal agents. Depending on the work of the profession the kind of the insurance also vary. In Italy, for instance, a disposition was introduced to make the professional liability insurance a duty for every self-employed professional in the country.
If the policy is not renewed in time, there can be a gap in coverage or lapse of coverage. It is to be noted that the policy must be renewed on time and the company also won’t allow people to backdate the policy. Many of the cases the companies allow a grace period up to 45 days but this not mandatory. Some professionals are still of the opinion that they do not need continuous coverage due to various reasons. If the grace period is not allowed, there will be no coverage for the claim placed on the dates before the new effective date. Under the occurrence form of professional liability, the claim has to occur during the term of the policy but can be reported even after. This feature is called unlimited reporting feature. The premium amount to activate this feature is high in most of the cases. There is an extended reporting period or tail reporting period was claims can be put in front of the carrier up to six months after the expiration of the policy. In all these cases additional premium charges are imposed.
Keeping your expired policies in a safer place is good. If the professional gets sued in the future, then for those expired cases, the attorney may be able to find coverage. Also, be choosy while choosing your insurance company. Your decision should be wise as there are many mismanagements in this market. Make sure your insurance company is highly competent in the profession you practice. So, as professionals, it’s worthwhile to have a professional insurance policy, because you can be sued even for the mistake that you haven’t committed.
