What Is Professional Liability Insurance and Who Is It For?
Professional liability insurance protects you against the legal compensation you may have to pay for losses caused to clients or others by incomplete or wrong work you do unintentionally in your profession.
It is an important protection for professionals who serve people every day and could make a mistake — doctors, lawyers, accountants, engineers, architects, pharmacists and more; for doctors it is a legal requirement. This guide explains what the policy covers, its conditions, exclusions, profession-specific clauses and what determines the price.
- It covers compensation claimed for professional errors, negligence, misstatements and breaches of confidentiality.
- Defence costs (court costs and lawyers’ fees) are also covered.
- It is compulsory for doctors; for other professions it is optional.
- Intentional and illegal acts, and acts under the influence of alcohol or drugs, are excluded.
Contents
1. What Is Professional Liability Insurance?
A mistake in your professional work can cause serious financial loss to the other side, and you may face a large compensation claim. Professional liability insurance takes on the financial burden of that compensation, so you can carry on working without worrying about the risk.
Which rules apply to professional liability insurance?
The general provisions of all professional liability insurance are set by the General Conditions for Professional Liability Insurance, published in the Official Gazette on 16 March 2006. In line with European Union practice, it has been made compulsory for some professions by law.
Where is the policy valid?
Cover applies to professional activities carried out within Turkey. If you also work abroad, those activities can be covered on request.
Who is professional liability insurance for?
It is usually issued for professionals who are members of a professional chamber or association, and for businesses providing such services. It is compulsory for all doctors and dentists working in public or private healthcare institutions or their own practice; for other professions it is optional.
| Profession | Example risk |
|---|---|
| Doctors and healthcare professionals | An error in diagnosis or treatment (compulsory for doctors) |
| Lawyers | A client losing a right because a step was not taken in time |
| Accountants and financial advisers | A tax penalty due to an incorrect return |
| Engineers and architects | A calculation or drawing error in a project |
| Management consultants, HR | A client’s financial loss due to wrong advice |
| Travel agents, insurance agents and brokers | A client’s loss due to an incomplete or wrong transaction |
| IT, software, media, translation, call centres, loss adjusting | An error, breach of confidentiality or failure to provide the service |
2. What Does Professional Liability Insurance Cover?
The policy covers compensation claimed from you for losses caused to third parties during your professional service, and the costs that arise in the process.
Which situations are covered?
- Neglecting a duty through negligence
- Making an error or a wrong statement
- Making a misleading statement
- Breach of confidentiality
- Failing to provide the professional service
In these cases, the compensation third parties claim from you is paid within the policy limits.
Are defence and court costs covered?
- Defence costs: court costs and lawyers’ fees
- Costs of attending court: your daily expenses when you need to attend a hearing
- Defamation and non-material damages: depending on the policy, compensation claimed for defamation or non-material damage
What conditions must be met for the policy to apply?
- The error or event must occur during the professional activity defined in the policy and within the policy period
- Compensation must have been claimed from you for that error; the claim must be made within the policy period or within a set period after it ends (usually 2 years)
- Unless the policy says otherwise, professional errors by your staff are also covered
- Other costs can be added to the policy if the insurer accepts them
When does the insurer’s liability begin?
Unless agreed otherwise, the insurer’s liability begins when the premium is paid; delivery of the policy alone is not enough. Also, information not disclosed or disclosed incorrectly when the policy is made may require the contract to be on different terms, so it is important to declare your professional activity and volume of work fully.
3. What Does Professional Liability Insurance Not Cover?
The conditions of professional liability insurance are clearly defined; some situations are excluded from every policy:
Which situations are excluded?
- Losses caused by illegal or unethical conduct
- Losses caused by the use of alcohol or drugs at work
- Any act committed intentionally during professional activity
- Work outside the professional activity defined in the policy
Why does setting the right sum insured matter?
If you set the cover limit too low, you pay the part of a large claim above the limit yourself. Setting the limit according to your profession’s risk and your volume of work gives both the right cover and the right premium.
4. Profession Clauses and Price
Clauses are special terms added to the insurance contract to widen or narrow the cover. Professional liability insurance has clauses defined for each profession.
| Clause | What does it cover? |
|---|---|
| Doctor | Harm to a patient during professional activity; court costs and lawyer’s fees if included |
| Lawyer | Loss to a client from a duty not properly performed; court costs if included |
| Insurance agent | Loss caused by the agent’s professional activity; lawyer’s fees and court costs if included |
| Accountant and financial adviser | Compensation, court costs, lawyer’s fees, SGK premiums, tax penalties, late-payment surcharges and interest |
What is special about the accountant clause?
Besides compensation and court costs, the accountant and financial adviser clause can also cover SGK premiums, tax penalties, late-payment surcharges and interest arising from an incorrect transaction. As a rule, this clause is valid for five years; a longer period can be agreed.
What determines the price of professional liability insurance?
There is no standard package price, because a surgeon’s risk is not the same as a consultant’s. The premium is calculated from:
- The profession’s risk group: professions that directly affect human health or large structures are in a higher risk group
- Cover limit: the maximum paid for a possible error; the higher the limit, the higher the premium
- Volume of work: annual turnover, number of cases or projects
- Extras: such as non-material damages, defence costs, lost documents
- Claims history: a claim-free professional record gives a better price
5. Frequently Asked Questions About Professional Liability Insurance
What is professional liability insurance?
Insurance that covers, within the policy limits, compensation claimed from you for losses caused to others by errors, negligence or incomplete work you do unintentionally in your profession.
Is professional liability insurance compulsory?
It is compulsory for doctors and dentists. For other professions it is generally optional.
Which professions can get it?
Many, including doctors, lawyers, accountants, engineers, architects, consultants, travel and insurance agents, IT and media professionals, translation agencies, call centres and loss adjusters.
Are lawyers’ fees and court costs covered?
Yes. Defence costs — court costs and lawyers’ fees — are covered within the policy limits.
Is a lawsuit filed after the policy ends covered?
If the error was made during the policy period, claims made within a set period after the policy ends (usually 2 years) are also covered; details depend on the policy terms.
Are my employees’ errors covered?
Unless the policy says otherwise, professional errors by staff working at your business are also covered.
Can my work abroad be covered?
Yes. Cover normally applies to activities in Turkey; activities abroad can be added on request.
What determines the price?
The profession’s risk group, cover limit, volume of work, extras and claims history.
Covers, clauses and price vary by profession, volume of work and insurer. This page is for general information; contact us for a quote for your profession.
Professional liability insurance for your profession
We compare quotes from seven insurers and choose the best one for you together.
We set a limit that suits your profession and volume of work together, and compare quotes for you.