Life in today's time is replete with stress, challenges and unforeseen dangers. You may have insured yourself against a variety of dangers to your health, life, work, property, etc but what if you as a professional or company, are sued on certain grounds? Is there a way that you can settle a claim no matter how high it is? In many cases the answer to that question would be “No” as most individuals and businesses would have to cripple themselves to raise the money to settle a particularly large claim. But there is a way to safeguard yourself from such an eventuality and be in a position to make the payout without bankrupting yourself and that is professional liability insurance.
So what does professional liability insurance entail? This type of insurance is meant for individuals offering professional services (e.g. doctors, chartered accountants, etc) and businesses and covers the cost of paying out damages in case of claims on account of negligence, malpractice, etc. On technical grounds, this type of policy comes into force on alleged failure to perform on the part of, financial loss caused by, and error or omission in the service or product sold by the policyholder. It is particularly applicable to those in skill advice and services sector which includes those providing financial services, lawyers, doctors, BPOs, IT companies among others.
The most notable factor in this policy is that this policy lays a lot of emphasis on the fact that the loss must be to a third party who has suffered bodily injury or property damage.
Benefits of Professional Liability Insurance
· This policy offers a benefit of Retroactive period on continuous renewal of policy whereby claims reported in subsequent renewal but pertaining to earlier period after first inception of the policy, also become payable.
· Group policies can also be issued covering members of one profession. Group discount in premium is available depending upon the number of members covered.
· Take care of costs incurred in the defense or investigation of a covered claim.
· Works to your advantage in a big way as it helps protect your business integrity and assets.
· Covers the cost of damages awarded.
Usually, the amount of maximum loss is mutually agreed between the insurer and the policy holder, and the premium is calculated based on this amount. This mutually agreed pricing is based on the company’s balance sheet and the nature of activity pursued by the insured. The underwriting is done in accordance to the anticipated possible maximum loss based on the statutory liability created as per the law of the land. However, if the ambit is beyond the geographical boundaries of the country the law of torts also plays a role in the entire calculation.
While buying this type of policy, always read the fine print and compare existing policies --premium, benefits, disadvantages, sops, terms and conditions--to see what suits your needs the best. It's always best to buy an insurance policy online as it saves time, is cost effective & is a transparent option.
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