Final answer:
Professional Liability Insurance protects service-providing professionals against claims of negligence or harm. It covers legal defense costs and awarded damages. Proof of insurance usually comes in the form of a certificate detailing coverage and policy dates.
Step-by-step explanation:
The concept of Professional Liability Insurance (PLI), also known as Professional Indemnity Insurance (PII), is crucial for professionals who provide advice or services to their clients. This type of insurance is designed to protect professionals against legal costs and claims for damages from an act, omission, or breach of professional duty in the course of their business. When a client alleges that a service was performed negligently and caused them harm or loss, this insurance can cover the professional's legal defense costs and any damages awarded to the client.
Typically, professions that require this type of insurance include lawyers, accountants, architects, engineers, and healthcare providers. When presenting proof of PLI, one must normally provide a certificate of insurance indicating the coverage limits, the policy number, and the effective dates of the policy. This document serves as a verification that the professional has an active insurance policy to cover potential professional risks.