Professional Business Insurance: Understand Coverage Requirements

Professional business insurance provides coverage to individuals such as lawyers, doctors, insurance agents, stockbrokers, accountants and other individuals who are engaged in a professional practice. This coverage protects professionals if they are held liable as a result of their work.

Many professionals are required to have some form of professional liability and E&O coverage. This coverage provides a way for professionals to meet the costs associated with lawsuits and other issues that may arise when dealing with the public.

Professional Liability

Professional liability covers a professional against negligence or claims that occur. Professional liability is also referred to as malpractice insurance. An insurance company underwriting professional liability offers a plan that gives a stated amount for general liabilities along with coverage that sets a limit on the maximum amount paid for any one claim or incident. These policies are written on an individual or group basis and are renewable on an annual basis.

Errors and Omissions

Errors and omissions or E&O coverage provides protection for acts of liability that arise for a professional that are based on both intentional and unintentional acts that result in harm.

Professional Business Insurance Costs

Professional business insurance increases the costs of services provided by professionals. This is due to increases in lawsuits that require a professional to recoup their costs associated with paying higher premiums. Premiums also increase as competition lessens for a particular line of professional business insurance or a reduction in carriers available to provide coverage.

How Professional Business Insurance Works

The professional business insurance coverage that is obtained by professionals acts in the same manner as other types of property and casualty insurance plans. As claims arise, the professional reports the claim on a form as required by the insurance company. The insurance company follows up on the claim for processing and a determination as to the validity of the claim. The procedures for handling a claim are set forth in the insurance company’s claim handling procedures.

Keeping the Coverage In-Force

The coverage stays in-force until it reaches its general liability limit or the insurance company determines not to renew the policy. Non-renewal must be based on those reasons stated in the policy. The professional pays claims as required and must meet all of the conditions in order for claims to be handled in as timely a manner as possible.

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