In the context of insurance, what does professional liability insurance primarily protect against?

Professional liability insurance is specifically designed to protect professionals against claims of negligence and errors or omissions in the services they provide. This type of insurance is particularly crucial for individuals in fields such as healthcare, law, finance, and consulting, where the risk of a client claiming that a professional’s actions led to some form of financial loss is significant.

For example, if a financial advisor fails to provide appropriate investment advice, resulting in substantial losses for a client, the professional liability insurance would cover the costs associated with defending against such a negligence claim. This coverage is essential because it helps professionals manage the financial risks associated with their responsibilities, ensuring they can continue to practice without the constant fear of potential lawsuits over their professional judgment or decisions.