Professional liability insurance is a type of insurance professionals can purchase to shield themselves and their businesses against legal claims from their clients. In most cases, these claims allege that a professional caused injury to a client through error, negligence, or misrepresentation.
Typically, a professional is someone with a specific expertise and requires special licensing to do their job, such as a doctor, lawyer, engineer, accountant, real estate agent, or someone in another occupation with licensing requirements. In some cases, professionals are required to carry some form of professional liability insurance to maintain their license.
It’s not uncommon for professionals to own their own businesses, so it’s worth noting the limited scope of professional liability insurance. Although it can provide a lot of important protection from claims of negligence brought by clients, it usually doesn’t cover other forms of liability, such as employer’s liability, cyber liability, or even general liability.
How Does Professional Liability Insurance Work?
Professional liability insurance coverage usually only applies to claims made during the policy period. This is known as a “claims-made” basis, and it can indemnify an insured party from loss as a result of claims made during the policy period – as long as the claims stem from covered errors, negligent acts, and other covered conduct.
A claims-made policy differs from an occurrence policy in that the latter applies to claims brought at any time in the future as long as the incident occurred during its policy period. If a professional with a claims-made policy also wishes to protect themselves against future claims after their policy expires, they can purchase “tail coverage,” which is an extension of the policy’s reporting coverage period.
When Should I File a Professional Liability Insurance Claim?
Due to the likelihood that a professional liability insurance policy is arranged on a claims-made basis, it’s important for policyholders to advise their insurers or file a claim as soon as possible within the policy period.
Doing so can provide the best possible chance of the insurer accepting the claim and providing the coverage necessary to protect the insured from the impact of a claim brought against them.
How Long Does a Client or Patient Have to Sue a Professional?
The duration of a client or patient’s right to sue a licensed professional, who allegedly caused injury, depends on their state’s statute of limitations for such claims.
For example: The statute of limitations for medical malpractice claims in Georgia is two years, whereas it’s three years in California. Minnesota protects a patient’s right to file a claim against their doctor for as long as four years, while the statute of limitations can last as long as five years in Maryland.
It may be best to look up your state’s statute of limitations for claims relevant to your profession when deciding how much professional liability insurance or tail coverage to purchase.
Contact Us Today for Insurance Expertise
If you’re a professional who’s interested in purchasing liability insurance, you can consult with one of our specialists at Insurance Specialists, Inc. We can advise you of your options and find a policy that matches your needs as closely as possible.
Learn more or get started today when you contact us online or call (888) 451-0883.