What is professional liability insurance designed to protect against?

Professional liability insurance is specifically designed to protect individuals and businesses from claims of negligence or malpractice that arise from the services they provide. This type of insurance is critical for professionals such as doctors, lawyers, accountants, and consultants, as it addresses the legal liabilities they may face if a client believes that their professional service was substandard or caused harm.

In the context of the correct choice, the essence of professional liability insurance lies in covering legal costs and settlements that could arise from claims questioning the professional conduct or competence of the insured party. This includes situations where a mistake or oversight might lead to a financial loss for a client, hence the emphasis on ‘negligence’ and ‘malpractice’.

Other options pertain to insurance products or coverages that cater to different types of risks. For instance, unintentional damage caused during an accident typically falls under general liability insurance. Losses due to unexpected market changes are generally addressed through business interruption or property insurance, and the cost of defending against criminal charges would usually require a different kind of coverage, such as criminal defense insurance. Thus, the focus of professional liability insurance on negligence and malpractice makes it distinctive and essential for those in professional fields.