What is Professional Liability Insurance (PLI)?
Professional liability insurance is an essential type of insurance predetermined by lawyers, accountants, physicians, and other professionals for security in case of any insecurity from the client’s side. The term is also called PLI.
Although the overall amount of PLI is low comparatively, it’s secure to use for everyone. In simple words, PLI is an insurance type that protects your business and your company in case of any mistake from your side. Another term used for this purpose is error and omission insurance. So, if you are a consultant or a company owner, we highly recommend using this insurance facility to secure yourself from future losses.
How Does PLI Work?
The working of PLI is simple yet challenging to understand. As we mentioned above, it is used to cover the upcoming loss that one may face due to the political quarrels raised by the clients. And it is made on a claim-made basis. Its working depends upon the field in which you are working.
For example, if you belong to a medical professional, then it’s called malpractice insurance. It’s named errors and omissions insurance for real estate people or realtors. Two essential terms which everyone should know in this case are:
Retroactive date: It is the date on which the specific incident occurred, or it may be specified on a document for an incident based on your policies.
Extended reporting period: As the name represents, it is the specific date after the retroactive date and is the duration you asked for or mentioned in your policy to solve the incident or error in the PLI. In this case, even if your policy or the final date is expired, you still have the time for 30 to 60 dates more than the required date to fix the error in the specific form.
Hence, you need to cover the claim in a specific time duration. You must cover this claim for a specific duration, either on the retroactive date or the extended reporting period. The company by which you take this service will claim for your losses, and one should solve the issue or defend the claim in the specific duration mentioned above. The claim covers all the health losses, damages, legal defense losses, and earning losses depending upon the situation.
Covered & Non-Covered Areas of PLI
There needs to be more clarity about the covered and non-covered areas of PLI, due to which people face problems. Here are some of the essential covered and non-covered areas of PLI:
Covered Areas of PLI
- Failures or negligence for the required criteria/services
- Missed or late deadlines
- Claims or payments against you
- Mistakes, omissions, and errors
- Undelivered services
Non-Covered of PLI
- Small or large body injuries
- Property damages
- Lawsuits by the employees
- Fraud activity
- Criminal actions
Cost of PLI
The overall cost of PLI is meager than all other types of insurance. The estimated cost of PLI is $500 to $1000 per year. The cost is average, i.e., low or low. However, the cost may depend upon the earnings and expenses of a person to handle professional mistakes. It’s also dependent on the issue coverage limit of a person who hires a company to handle professional mistakes.
Who Should Go for PLI
Here are some reasons why we should go for the PLI:
- The first and most important advantage of the PLI is the protection of your income in case of insecurity or a mistake made by you.
- Covering the variety of claims is another advantage you can gain.
- It helps in protecting your breaches of privacy in case clients or other professionals leak it. Hence, it helps in protecting your personal information.
- To open a liability claim, you must take professional liability insurance services.
- PLI also helps to protect your name in the name of the good list and golden people, as you have the right to claim against your notorious name.
- It helps to protect you in case you. Face losses and damages due to any negligence.
Pros & Cons of PLI
Pros of PLI
Way to Save you
PLI is the way to save your life if a case is open from your opponent or the clients in case of misconceptions you make.
Cover Multiple Areas
Another benefit of the PLI is that it covers multiple criteria. So, no matter if you are a pharmacist, lawyer, or professional belongs to any other field; the PLI is always there to assist you.
Protect your Earning/Money
One of the most significant advantages of the PLI is that it helps in protecting your money in case of different errors and omissions and mistakes made by you.
Cons of PLI
No Policy Back Guaranteed
One of the biggest cons of PLI is that there is no policy-back guarantee of the consent you have taken. So carefully read the terms and conditions of the specific department in which you work.
Uncontrolled Premium Cost Disadvantage
Most of the time, the cost of the PLI is based on multiple factors, including those which are out of your knowledge or control. It means there is a high chance of high costs and expenses sometimes.
Bad Relations
Another disadvantage of the PLI is that your relations with clients, friends, and people who are involved in the matters may need to be better.
Final Verdict
Hence, PLI is a needy type of insurance that everyone should use, especially if you are a famous person or professional in a specific field. We recommend using this facility as the cost is minimal. So, join PLI by a company and save your life for the future.