Professional Liability Insurance in Arizona
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Professional liability insurance in Arizona

Professional liability insurance coverage, also called errors and omissions insurance (E&O), protects small business owners against the cost of client lawsuits over unsatisfactory work. Professional service providers in Arizona may need this coverage to get licensed or to work with certain clients.

What is covered under professional liability insurance in Arizona?

Professional liability insurance covers the cost of lawsuits related to the quality of your work, including legal fees and settlements.

It covers the following types of customer claims for many Arizona businesses:

  • Accusations of negligence, such as an architect who creates an unsafe building design.
  • Work mistakes and oversights, such as an accountant who makes a mathematical error or fails to include the right data in their work resulting in a financial loss to the client.
  • Inaccurate advice, such as an attorney who misinterprets a legal statute that results in a costly mistake.
  • Missed deadlines and undelivered services, such as a web designer who fails to build a website before a client’s busy season.

Many hospitals and other healthcare facilities in Arizona require that physicians carry malpractice insurance.

Is professional liability insurance required in Arizona?

Most Arizona small businesses are not required by law to carry professional liability insurance. However, you might need this coverage to sign a contract or to get a license in your field.

Home inspectors

Home inspectors in Arizona must meet several criteria in order to be certified, including:

  • Errors and omissions insurance for negligent acts during a home inspection with a $100,000 per-occurrence limit and a $200,000 aggregate limit.
  • A surety bond or proof of minimum net assets in the amount of $25,000.

Healthcare professionals

Professional liability is referred to as medical malpractice insurance when it applies to doctors and other healthcare professionals, such as therapists. Arizona law does not mandate malpractice insurance for any profession.

However, many hospitals and other healthcare facilities in Arizona require that physicians carry malpractice insurance. For example, Banner, Valleywise Health Medical Center, and Phoenix Children’s Hospital all require malpractice insurance for physicians with admitting privileges.

The typical policy limits are $1 million per occurrence and $3 million aggregate, though high-risk specialties should consider higher liability limits.

Real estate agents

Though E&O insurance is not required for real estate brokers and salespeople in Arizona, some states require agents and brokers to carry it.


For lawyers, professional liability is also known as legal malpractice insurance. Arizona doesn't require attorneys to carry legal malpractice insurance, but they must disclose whether or not they carry this coverage.

Get professional liability insurance for your Arizona business

Who should carry professional liability insurance in Arizona?

Any business, from Scottsdale to Phoenix, that provides a professional service or expert advice should carry professional liability coverage, as a client could sue if your service or advice causes accidental harm. Even an unwarranted lawsuit can be expensive between attorney’s fees, court costs, or a settlement.

Industries often at risk for professional liability claims include:

Technology professionals

IT consultants and other tech professionals are susceptible to lawsuits related to system downtime, data breaches, missed deadlines, and errors. They can bundle E&O insurance and cyber insurance into one policy—tech E&O—to protect against all of these risks.

Building design businesses

Those who work in building design, such as architects and engineers, are at risk of a lawsuit if a client accuses them of making a costly mistake. For example, a bridge could develop cracks over time, or a project could be delayed for months due to unforeseen circumstances.

Contractors and construction businesses

Those who work in construction and contracting, such as carpenters and electricians, could face a client lawsuit over construction delays. They could also face accusations of negligence if the customer is dissatisfied with their work or must make expensive changes or repairs after a job is finished.

Insurance professionals

Insurance professionals, including agents and insurance brokers, often deal with large amounts of financial data and must use their best judgment in advising their clients. If a client doesn’t have enough coverage, or the right type of coverage, they might blame their agent or the insurance agency for failing to make sure they were protected.

Even if you’ve done nothing wrong, a disgruntled customer might file a lawsuit if your advice leads to a financial loss.

How much does professional liability insurance cost in Arizona?

View video transcript.

Get professional liability insurance to protect yourself from claims that you didn't deliver on a deadline, or made a costly mistake.

Some clients require you to have this policy. It can protect you from expensive lawsuits for only about 60 dollars per month.

Don't put your business at risk. Apply for your policy today!

Alert. Alert.

The average cost of professional liability insurance nationwide is $61 per month. In Arizona, the average cost is $59 per month.

The cost of professional liability coverage depends on several factors, such as:

  • Your type of business, industry, and similar risk factors
  • Coverage limits and deductible
  • Your business size and location
  • Business operations
  • Your claims history

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How does professional liability insurance work in Arizona?

Professional liability insurance covers your legal defense costs if you’re sued over a mistake in your professional work.

Even if you’ve done nothing wrong, a legal battle can be expensive. In addition to your attorney’s hourly rate, you’ll likely be charged for administrative costs such as copying, filing, and travel expenses. You may also have to pay for expert witnesses to testify on your behalf, a court-ordered legal judgment, or a settlement to avoid trial.

Professional liability insurance covers all the above, up to the coverage limits of your policy. The policy limits you choose should take into account how expensive it can be to fight a professional liability lawsuit. You also need to determine the amount of coverage required to obtain a contract or work in a certain field.

Small businesses with low risks can find affordable professional liability coverage. If you're unsure how much coverage you need, talk to a licensed agent.

Are there any exclusions in professional liability insurance?

A professional liability policy covers a wide range of lawsuits, but it won't cover intentional harm you cause to others. Most insurance companies exclude:

  • The illegal violation of any law, regulation, or statute
  • Any services you provide under the name of another entity, such as a subsidiary business or organization not listed on your policy
  • Defamation, such as libel and slander
  • Discrimination

Does general liability insurance include professional liability coverage?

General liability insurance doesn’t include professional liability coverage. General liability covers common business risks and liability claims such as customer injuries, customer property damage, and advertising injuries.

If a customer falls and suffers a bodily injury at your workplace, it would be covered by your general liability policy, including any legal defense costs. If someone sues you over unsatisfactory work, it would be covered by your professional liability coverage.

Read more about commercial general liability vs. professional liability insurance.

What other types of insurance should AZ businesses consider?

General liability and professional liability are often the first two policies bought by small business owners. However, they aren’t the only types of business insurance you might need.

Workers’ compensation insurance is required for all Arizona businesses that have employees. Workers’ comp covers the cost of employee injuries and illnesses related to their jobs.

Commercial property insurance covers your business property and physical location. It’s often required to sign a commercial lease.

A business owner’s policy (BOP) combines general liability coverage and commercial property insurance. It’s usually less expensive than buying each policy separately.

Commercial auto insurance is required in Arizona for any vehicles used solely for work purposes. This business insurance policy covers costs related to an accident involving your work vehicle.

Cyber insurance covers the cost of dealing with a data breach or malicious software attack.

Employment practices liability insurance (EPLI) protects against legal expenses related to claims of harassment, discrimination, wrongful termination, and other violations of employees’ rights.

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How do I get professional liability insurance for my Arizona business?

Complete Insureon’s easy online application today to get business insurance quotes from top-rated U.S. providers. Our licensed insurance agents can help answer any questions and provide advice. Once you find the right Arizona business insurance, you can begin coverage in less than 24 hours.

Updated: July 26, 2023

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