Professional indemnity insurance, or more commonly referred to as professional negligence insurance but more often referred to as professional liability insurance, is basically a type of financial protection insurance that helps safeguard professional and business entities in the United States from monetary claims arising out of professional negligence. Professional indemnity insurance is designed specifically to assist individuals and business entities engaged in various industries by providing monetary protection for those engaging in their professional services in their capacity as well as in their personal capacities.
In general, it is required by the law that any person engaged in professional services who renders services for the public or a third party has insurance coverage on these services. Professional indemnity is meant to cover these damages or losses in the case of legal claims being filed against an individual or entity in the event of negligent actions on the part of the individual or entity, including, but not limited to, damages sustained while engaging in professional services. This will help protect the organization and individuals involved in the professional practice, thus helping to make sure that the claims filed by clients are valid and the compensation they are seeking is due to them.
Professional indemnity insurance can come in the form of either a fixed premium for a fee-for-service agreement or a combination of both. In order to understand how malpractice insurance works, it is important to know exactly what a malpractice insurance policy covers and how it operates.
What a malpractice insurance policy covers is the loss, damage and costs of medical bills, pain and suffering, rehabilitation expenses and lost wages and income that may result from a malpractice claim. This means that while the policy covers the costs and damages from malpractice, it does not cover all of the costs and damages that may result from a malpractice claim; therefore it is important to understand the terms of the policy, including exclusions before signing or purchasing the policy.
Another aspect to consider when purchasing a policy is to know precisely what the company stands to lose if the policy is deemed inadequate by the courts. While insurance companies have no liability for the claims of clients and other individuals who are injured or who become ill, they do have financial loss if a client sues the insurance company and they also stand to lose financial loss if their claims are found to be invalid or frivolous.
Professional indemnity insurance is intended to provide financial protection and to organizations and individuals in the face of lawsuits, and therefore insurance policies are often complex and expensive to purchase and enforce. Professional indemnity Insurance policies can vary depending on the nature and extent of the service that the individual or entity is engaged in. It is important to find a reputable company to work with when determining the amount and types of coverage to purchase.