Good professional liability insurance will help the insured person in these cases. It examines the legality of claims for damages and rejects them if they are not justified. This is the passive legal protection that every insured person enjoys. In the event of a dispute, the insurance even covers the costs of clarifying the claims for damages in court. Should the customer actually have a legitimate claim, then a business liability insurer will take over such as Hiscox the necessary costs for repairs and compensation for pain and suffering. Basically, in the event of damage, all human-caused personal injury or property damage is covered up to the contractually agreed maximum amount.
Who needs professional liability insurance?
Anyone who causes damage in private life must pay for it with their own resources or is protected by their private liability insurance. This is not the case with damage that occurs during professional activities. By law, anyone who harms others must pay for the harm. In private life, a private liability insurance will take over such claims. It pays for the damage caused by the insured and, if necessary, settles unreasonable claims in court. Anyone in his capacity as a trader or freelancer makes a mistake is liable to pay damages to the injured customer. Business liability insurance is therefore required for professional activities. There are different damage situations and therefore different tariffs for different sectors. For example, the risk of a hairdresser causing millions in damage is significantly lower than with a building contractor.
Whenever there is a risk that a lawsuit could jeopardize your own existence, such insurance should be taken out. These professional groups include, for example, freelance interpreters, translators, journalists, IT experts and brokers. Public liability insurance is also worthwhile for people who run online shops or earn their money with a social media presence.
For whom is professional liability insurance mandatory?
Due to legal requirements, professional liability insurance is mandatory for some professional associations. These professional groups include doctors, lawyers and architects. Errors in their work can result in considerable damage with high claims for damages. This compulsory insurance is also there to give the patient or client security. Doctors must take out professional liability insurance according to the requirements of the State Medical Association.
In the case of professional groups such as lawyers or tax consultants who pursue an advisory activity, there is a risk of financial damage due to incorrect advice. The consulting professions also include notaries, management or financial consultants. For this group, pecuniary damage liability insurance is recommended, sometimes even mandatory. If the client suffers damage as a result of incorrect advice or if the tax consultant submits the documents to the tax office too late, the insurance company will pay the compensation due.
What damage is not covered?
Company liability insurance does not cover damage caused by improper work of the company when executing the order. This is an uninsurable risk. For example, if a shelf is incorrectly assembled and falls over, this is not damage covered by the company’s liability insurance. However, business liability insurance covers personal injury or property damage to third parties. For example, if a customer is injured by the shelf, the insurance will cover this damage.
What is the premium and the sum insured?
As with all insurance contracts, coverage of the amount of damage is agreed here. If damage occurs, the insurance company pays a maximum of this amount. In professional liability insurance, property damage, personal injury and financial damage have different insurance coverage, which is also industry-specific. Since professional liability insurance is mandatory for many activities, the law usually provides for a minimum amount of insurance. Freelancers and the self-employed should ensure that the contract contains an amount of coverage that corresponds to their personal risks in everyday work. It is also important to know that professional liability insurance does not cover occupational disability.
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