A professional liability insurance is a type of policy that available for businesses in most states, a policy that is essential for the safety of any business because it provides protection for any professionals, including lawyers, accountants, physicians and many others, in the case of certain claims initiated by third parties, such as clients and customers, for damages caused by the professional’s negligence. The type of policy can have different names, depending on the profession – in the medical profession, for example, the policy is called a malpractice insurance and in many fields it is called an errors and omissions insurance.
How Professional Liability Insurance Works
The policy provides the insured business coverage in the case of third-party claims for damages or harm that is caused by the insured company’s negligence in rendering services or arising from the products of the insured business during the period for which the policy is valid. Professional liability insurance policies provide protection not only for the insured company’s financial situation and assets, but for the company’s reputation as well and also provides quick resolution by making the funds required available to the client that has suffered any damage because of the insured company’s mistake or omission.
Examples of Claims that Professional Liability Insurance Policies Provide Coverage For
One of the most common examples of the claims that such professional liability insurance Colorado policies cover for are the malpractice claims that medical professionals are faced with. These professionals operate under the threat of lawsuits filed against them by patients or the relatives of the patients who have allegedly sustained injuries or physical harm because of the treatments provided by the medical professionals. The amounts claimed are usually huge and medical professionals can use their malpractice insurance to offset the costs partially or completely.
Other professions that need a professional liability insurance include most types of service providers and businesses the activities if which involve the provision of services and the selling of products. Some of the best examples are web developers, software developers, real estate brokers, IT consultants and financial consultants, lawyers and notaries public. The insurance policy provides coverage for the insured company’s failure to render the services agreed upon with the client or the failure to render those services in the right quality. Standard professional liability insurance policies can be extended to cover for issues related to intellectual property and breach of warranty.
What is Not Covered by the Professional Liability Insurance
The professional liability policy covers the insured business for third-party claims, not for the damage sustained by the business’ property or for the injuries sustained by the company’s employees during work. To have coverage for these damage types, the business will need other types of insurance policies – the costs related to the accidents sustained by the company’s employees are covered for by the workers’ compensation insurance, while the damage sustained by the company’s properties is covered for either by the commercial property insurance or by the commercial auto insurance, both of them mandatory in most states, too.