Professional liability

Professional liability

Professional liability insurance (Professional indemnity insurance) is an insurance to protect professionals like doctors, engineers and lawyers from their clients and patients who may claim that those professionals were negligent. Depending on what profession a professional is in, this insurance may take different names. In medical profession, this insurance is termed as “medical malpractice”.

Normal liability insurance will be responsible only for damages to body or property. But in certain professions it is possible to face claims without causing a physical injury or damage. These claims are mainly due to misrepresentation, exploitation of faith and wrong advice. For instance, software written by a software engineer may not work as specified. This may not cause any physical damage to the buyer of the software but may cause financial loss. In such a case general liability insurance cannot be claimed.

Usually the employer is always responsible for the actions of its own employees by the principle called “vicarious liability principle”. And usually the employer will have an insurance policy to cover the claims. Employed professionals are not held responsible personally in most cases. Also, in most cases the employer won’t sue the employees as the employer usually makes up the loss through the insurance.

Insurance companies recognize the various kinds of risks in different professions. They provide tailor made insurance policies to various professionals. When an insurance organization makes payment for an issue arising due to professional liability, it cannot recover the money from the employee of the company who causes the loss unless the employee’s act is a very serious misconduct.