Professional Liability Insurance
Save money by comparing insurance quotes from multiple carriers.
What kind of work do you do?
Business owner discussing order on phone.
Logos of Insureon's Partners
We partner with trusted A-rated insurance companies

Professional liability insurance

Professional liability insurance icon

Professional liability insurance

Professional liability insurance, also called errors and omissions insurance, protects small businesses against the costs of client lawsuits over unsatisfactory work.

Why is professional liability insurance important?

Professional liability insurance is designed for businesses that make a living off their expertise.

Even the most experienced and thorough professional service provider makes mistakes. Unfortunately, clients may not be so understanding if your error costs them considerable time or revenue.

Professional liability insurance helps protect you from lawsuits filed by unsatisfied clients.

Businessperson balancing boxes on a tightrope.

For example, if you miss a project deadline, make an omission in your work, or provide ineffective business advice, your client may sue you.

If you’re served with this type of lawsuit, your professional liability insurance policy will cover legal defense costs up to your policy limit.

What does professional liability insurance cover?

When a dissatisfied client sues over a mistake made by your business, professional liability insurance can help cover the cost of legal defense, including the cost of hiring a lawyer.

Specifically, professional liability insurance will help provide coverage for:

Purple check mark

Work mistakes and oversights

Sometimes a simple mistake can cause one of your clients to lose money. When a client sues over an error made by your business, professional liability insurance can help pay for your legal defense expenses and more.

Purple check mark

Undelivered services

If your business promises to provide a service and fails to deliver, the client could choose to sue you. This may be even more likely if the client believes that your work negatively impacted their bottom line.

Purple check mark

Accusations of negligence

When a client hires you based on your specialized skills, they are entitled to a reasonable standard of care. If your work fails to meet industry standards or causes financial damage to a customer, your business can be accused of professional negligence and could face a professional liability lawsuit.

Purple check mark

Missed deadlines

If you or an employee at your small business misses a deadline, it may have tremendous repercussions for your client. Professional liability provides protection for your small business if a client sues over late work.

How much does professional liability insurance cost?

Professional liability insurance policies cost an average of $59 per month. This is based on the median cost of professional liability insurance. Most Insureon small business customers (51%) pay between $500 and $1,000 per year for their policies.

Your cost is based on a few factors, including:

  • Industry and risk factors
  • Coverage limits and deductible
  • Business size
  • Day-to-day operations
  • Claims history

Who needs professional liability insurance?

Professional liability insurance benefits a variety of industries that provide services directly to a client or customer. It is designed for both businesses and independent contractors that make a living off of their expertise in these industries.

However, there are a few specific professions who need professional liability coverage more often than others, including:

Accountants and auditors

Professional liability insurance for accountants and auditors covers the costs of lawsuits based on accounting errors, data entry errors, miscalculations, or lost documentation.

For example, if an accountant incorrectly enters a client's financial transactions into a spreadsheet and the budget falls short, the client may trace the mistake back and file a lawsuit. Professional liability would cover the accountant's cost of hiring a lawyer.

Because the policy offers indirect financial protection for the client, some clients will require proof of insurance before they agree to work with your firm.

Architects

Professional liability insurance protects architects against several accusations, including that a building design does not meet project specifications, was delivered late, or contains errors.

For example, if an architect designs a building for a client and it fails to meet the project’s specifications, the client could accuse the architect of negligence and file a lawsuit.

Some client contracts might include a clause that requires professional liability insurance coverage for architects.

Consultants

Professional liability insurance for consultants offers financial compensation for lawsuits alleging ineffective advice or inaccurate projections.

For example, a management consultant promises a company that it will improve its profits by 20% by a certain date. When the date arrives, profits have gone up, but not as much as projected. Professional liability insurance would help cover the consultant’s legal defense costs if the client sues the consultant over its financial troubles.

Some clients may ask for proof of professional liability insurance before they agree to work with a consultant.

Engineers

Professional liability insurance for engineers provides financial protection from lawsuits over disputes such as cost overrun, delivery delays, and problems with construction materials.

For example, if an engineer estimates that a building extension for a client would be completed by a certain date, but a concrete delivery issue forces the project completion to be delayed by a month. Professional liability insurance would help cover the engineer's cost of hiring a lawyer if the client files a lawsuit over the missed deadline.

Engineers may need to provide proof of professional liability insurance to a client, partner, or licensing board for some projects.

Healthcare professionals

Professional liability insurance for healthcare professionals offers the protection your healthcare business needs to continue providing its services while handling a lawsuit.

For instance, if a patient claims that neglect from a nurse caused bed sores, they could file a lawsuit against them. Professional liability insurance would cover legal expenses for the nurse, such as the cost of hiring an attorney.

While this coverage is sometimes referred to as medical malpractice insurance, the difference is that professional liability coverage often relates to a healthcare provider’s business activities, while malpractice covers your legal defense and settlement costs if you’re accused of being responsible for a patient’s injury or death.

How do I get proof of professional liability insurance?

Complete our easy online insurance application to get free quotes. Insureon's expert insurance agents can help you choose the best professional liability coverage that meets the needs of your small business.

You’ll typically be able to get coverage quickly and receive a copy of your professional liability insurance certificate on the same day.

Compare professional liability insurance quotes

What does professional liability insurance not cover?

While professional liability insurance covers many aspects related to legal action from a client, it does have a number of coverage exclusions. For example, it only covers the cost of defending against lawsuits – it doesn't pay for lawsuits you initiate.

Unless your policy has prior acts coverage, it will only cover any claims filed while the policy is active and for incidents that occurred after you bought the policy. In this case, endorsements can fill gaps in your professional liability coverage.

Other exclusions from professional liability insurance coverage include:

no coverage check mark

Customer injuries or property damage

If a customer is injured on your premises or you accidentally damage a customer’s property, general liability insurance can help pay for medical expenses or the cost of repairing or replacing the damaged item. It can also cover legal expenses if the customer sues.

no coverage check mark

Employee injuries

Workers' compensation insurance will cover medical expenses and partial lost wages for employees with work-related injuries or illnesses.

no coverage check mark

Employee discrimination lawsuits

Employment practices liability insurance (EPLI) will cover lawsuit expenses related to claims of harassment, discrimination, and wrongful termination.

no coverage check mark

Damage to business property

The property coverage included in a business owner’s policy (BOP) can pay for items that are damaged, destroyed, stolen, or lost.

no coverage check mark

Vehicles used by a business

Business-owned vehicles must be covered by commercial auto insurance. Personal or leased vehicles used by a business should be covered by hired and non-owned auto insurance.

no coverage check mark

Contingent bodily injury

Product liability insurance can pay for contingent bodily injuries – which are client or customer injuries that can be indirectly linked to your professional service.

Other common questions about professional liability insurance

When is professional liability insurance required?

There are typically a couple different scenarios when a business may be required to have professional liability insurance coverage.

Clients may request a certificate of insurance as proof that you have coverage in order to secure a contract. This way, they know that in the event that you make a costly mistake or don't meet their standards, they will be able to recoup their losses.

Additionally, if you decide to apply for certain professional licenses, many states will require that you hold professional liability insurance before you can submit your application.

Having a certificate of insurance makes it easier to establish trust in your business, as you can then show licensing boards, clients, and others that if you make a mistake in your professional work, you’re able to pay for any negative outcomes.

How does professional liability insurance work?

Professional liability insurance will help provide coverage for legal costs in the event that a client files a lawsuit against you over an accusation that you failed to meet expectations.

To make a professional liability claim, you can call your insurance provider. They will then ask you to provide some basic information, such a description of the incident and your policy number.

Many professional liability insurance policies are written on a “claims-made” basis with a retroactive date. This means that in order to collect your insurance benefits, your professional liability policy must be active:

  • When an alleged mistake occurs, and
  • When the claim is filed

With a claims-made professional liability policy, your coverage kicks in only when you file a claim during the policy period. Continuous coverage is key if you don't want to pay out of pocket for lawsuits.

Is there a difference between professional liability and errors and omissions insurance?

The short answer is no. Different industries use different terms for the same type of coverage. You may also see professional liability insurance called errors and omissions (E&O) insurance, even though they’re identical except for the name.

Errors and omissions insurance is used most often for insurance agents, real estate agents, tax preparers, and IT professionals.

Lawyers and doctors refer to this policy as legal malpractice or medical malpractice insurance, respectively.

How does professional liability insurance differ from general liability insurance?

General liability and professional liability insurance both protect against common small business liability claims, but they cover different types of lawsuits.

General liability insurance covers customer bodily injuries, customer property damage, and advertising injuries. In contrast, professional liability insurance covers any legal defense costs when a client or customer suffers a financial loss due to your professional services or advice.

Where can I learn more about professional liability insurance?

If you want to learn more about this policy, you can find additional answers in our frequently asked questions about professional liability insurance.

If there are any additional questions you have about coverage, you can also contact an Insureon agent.

Smiling business owner at a counter.
Get your certificate of insurance today
Follow the customer journey of how to get free business insurance quotes online with Insureon.
What our customers are saying
Carousel prev arrow
"Great streamlined process. Quick, easy, and support is very helpful."
Ryan F.
System integration
"Denise Smith is a breath of fresh air. I loved every second dealing with her. And, yes, I'm talking about buying insurance. Most people don't love that, but Denise made the experience exceptional. She is a rock star!"
Kristine W.
Food products manufacturing
"We needed quotes fast and coverage even faster. We received both. We appreciate your service. THANK YOU."
Rich H.
Engineer
Carousel next arrow
Delighted customer feedback.
Updated: September 30, 2022
Compare professional liability insurance quotes
Save money by comparing insurance quotes from multiple carriers.
What kind of work do you do?