What Customers Should Know About Professional Liability Insurance

Professional liability insurance coverage is an important part of hedging against potential risks in certain fields. Licensed professionals, in particular, may be subject to claims of negligence, malpractice, or misrepresentation involving their work. An architect or engineer, for example, might be accused of negligence for failing to identify structural flaws in a building they worked on.

In other words, professional liability coverage is a big deal. Take a look at what professionals should know about this type of insurance.

What Professional Liability Insurance Covers

Generally, policies from an insurance provider cover certain types of unintentional failures that lead to injuries. For example, an architect might have designed a walkway to use a particular type of material that wasn't sufficient for the expected traffic on it. If the walkways collapsed and people were hurt, the architect's professional liability coverage might kick in to cover any negligence claims.


It's important to be highly specific when working with a professional liability insurance provider. Do not assume that something is in the policy unless it is clearly stated there. Always read the policy carefully and think about how it might now apply if a claims adjuster sees some particular issue, and then ask your insurance provider how they can fill in that gap.

Some Problems Are Covered by Bonds

It's also worth noting that many issues that fall outside the domains of negligence, malpractice, or misrepresentation require bonds instead of typical insurance policies. These include things like project delays and failures to meet specifications. That's a different problem, and it requires a solution that can't be supplied by professional liability insurance.

Deductibles and Premiums

Deductibles and premiums work as sliders that change each other. A high deductible, the amount you'll have to pay out of pocket to cover legal expenses or a judgment, means you'll pay a lower premium but have to shell out more if you're on the wrong side of a lawsuit or claim. Conversely, a higher premium, what you pay every month to maintain the policy, will yield a lower deductible.

If you have a $10,000 deductible on your policy, that part is on you if the claimant or plaintiff prevails. Suppose the insurance company settled a claim for $50,000. In this scenario, you'd pay $10,000 and the insurance provider would pay $40,000. Whatever your deductible is, you should try to save that amount for the possibility of cover a claim or suit.