It covers full cost of defending against a negligence
Professional Liability Insurance (PLI), also called Professional Indemnity Insurance (PII), is a form of liability insurance. This insurance cover helps protect professional advice and service providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit. The coverage focuses on alleged failure to perform on the part of, financial loss caused by, and error or omission in the service or product sold by the policy holder.
Many professions are required to have professional indemnity insurance as part of their respective industry body’s regulatory requirements. Even if you are not obliged to have PI insurance policy, it makes sense to have one. Without it, you could be liable for extremely high legal fees and compensation payments, not to mention the loss of income due to spending time defending allegations.
Generally speaking, if you are providing advice then you should be considering professional indemnity insurance. Depending on the profession, it may be a regulatory requirement to take out PI insurance before being able to operate.