Professional
liability insurance covers policy holders for a range of professional
services they provide for their clients. This is otherwise
known as
errors and omissions insurance and as the name implies will cover you
for claims against errors and omissions in the work you do for your
clients.
This
type of insurance covers services for professionals who provide
advice to their clients, depending on the terms and conditions of the
policy. Obviously it is the documentation within the terms and
conditions that will determine what your PI insurance covers you for
and what you are excluded from if a claim is made against you.
Usually, the more you are covered for then the larger the premium you
will pay in order to obtain PI insurance.
Traditionally
occupations such as architects, lawyers, solicitors and consulting
engineers have been covered by professional liability insurance.
However in today's litigious environment there are now a number of
other occupations who are opting to cover themselves with this type
of insurance, such as website developers and IT professionals.
No
matter what sort of profession you are in you should consider taking
out PI insurance if you feel there is a level of risk that your
potential clients may suffer a loss from the advice that you give
them. If you feel that the level of risk is not offset from the
premium that you pay to the insurance company that is offering you
protection then you may consider weighing up the risk against this.
The
reason for this is the advice they offer to their clients may result
in a net financial loss. If this is the case then they may open
themselves to a potential claim from the services they provide for
their clients. Obviously this will depend on the nature of the
service and the claims they made about the service prior to being
engaged by their client.
However,
in most cases it is prudent to take out insurance for professional
liability if you feel there is a degree of risk against being sued by
a potential client arrangement.
There is
a cost associated with taking out such insurance and this us an
annual fee in most cases. Depending on the policy that you choose and
the terms and conditions stated within the policy, it will usually
only cover you for the period of time that the policy is open. For
example, just say you did work for a client a number of years ago and
had insurance for public liability open at the time of engagement. If
you let your insurance slip and a claim is made for the work you
completed a number of years ago then in most cases the policy will
have expired and you would not be able to use the policy to protect
the claim against your services.
That is
why it is critical to review and understand the terms and conditions
stated within the insurance policy that you decide to take out for
professional liability. During this review of the policy you will
then be able to understand what is included within the coverage as
well as what is excluded within the insurance policy documentation.
Obviously
not all professional liability insurance policies are the same. For
example the level of cover is a major factor in the premium that you
have to pay to the insurance company. That is why it is critical to
undertake an assessment of the amount of cover that you require for
your services. For example, the premium on cover for a $1 million
professional liability policy will be a lot less than that of a $20
million policy. That is why it is critical to undertake a review of
the policy and coverage that you expect.
There
are a lot of professional liability policies on the market and making
a choice as to the best policy to take out can be a time consuming
affair. That is why using the services of an insurance broker who
specializes in professional liability can be worthwhile. The reason
for this is that they have experience in the policies offered on the
market and can usually easily match your requirements with a
particular policy. Obviously the insurance brokers will take a
commission for the services they provide however it can be
advantageous because of the time you will likely save.
When
choosing professional liability insurance it is important to firstly
undertake an assessment of your requirements against the potential of
a claim from a client for the professional services you offer. From
there you can then start to narrow down an insurance policy that
suits your requirements against such a liability. It is then prudent
to obtain a number of quotes from insurance brokers who deal with
insurance for professional liability on a regular basis.