Professional Liability Insurance Explained

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Professional Liability Insurance

The company’s professional liability insurance allows the company to be covered against compensation for all damage caused to third parties during operation and during the company’s ancillary activities. Several types of guarantees are possible and recommended depending on the occupation and characteristics of the company.

Professional liability insurance definition

Any professional activity is likely to cause damage. Under certain conditions, professional liability may be incurred and penalties imposed. This is called Professional liability insurance

Why do you want professional liability insurance? Or who needs professional liability insurance?

Each company has the obligation to repair any damage caused to the other by the persons or the goods of which it answers. These damages can give rise to substantial compensation for a company, at the risk of calling into question the continuity of its operation.

To cover these risks, the company must take out professional liability insurance. Thus, an insurance company will bear all or part of the compensation to be paid to third parties in case of damage to repair.

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Is professional liability insurance compulsory?

There is no complete statutory obligation for a professional to take out professional liability insurance, depending on the business sector of the company.

Indeed, several professional bodies impose the subscription of a professional insurance. This is particularly the case for building professionals and regulated professions, for example.

Then, even if your industry does not require you to take out professional liability insurance, it is strongly recommended that you take out one of them. As mentioned above, the company is obliged to repair any damage caused to others by the persons or goods to which it is responsible.

Moreover, the fact that a corporate officer omitted to take out an insurance contract to cover the company is an act that can be characterized as a lack of management.

What does professional liability insurance cover?

The professional indemnity insurance cover the risks associated with the operation allows the company to be insured against:

  • The damage caused to third parties in the course of the activity,
  • The damage caused to the goods and materials entrusted,
  • The damage caused by employees or employees,

Then, several other types of specific guarantees are possible and may be necessary depending on your activity:

  • The liability insurance for corporate officers,
  • The automobile liability insurance,
  • The liability insurance after work,
  • Product liability warranty,
  • The liability insurance for the occupation of premises,
  • The extension of the civil liability insurance in the event of subcontracting,

How to define the risks to be covered by the professional liability insurance?

To ensure that your company is adequately covered for professional liability, we recommend that you review the situation with an insurer or an insurance industry professional.

Depending on your business and the characteristics of your business, the professional determines the risks to which you are exposed and offers you hedging solutions.

Thus, in the event of an occurrence of damage falling within the scope of the risks covered by the insurance contract, the insurance company shall bear all or part of the compensation for the damage caused in place of the insurance contract.