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 for self-employed and independent contractors

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 do independent contractors need professional liability insurance?

Professional liability insurance, also called errors and omissions insurance (E&O), is essential for independent contractors who offer expert advice or a professional service. This policy:

Provides financial protection against lawsuits. If a client files a lawsuit over the quality of your professional work, this policy can cover your legal costs. For example, if a construction contractor is sued for project delays, professional liability insurance could cover their legal costs.

Helps you comply with the law. Depending on your type of work, state laws might require you to carry professional liability insurance. For example, real estate workers often need this coverage. Lawyers and healthcare professionals might need to carry malpractice insurance – another term for this policy.

Fulfills client contracts. Your clients might ask you to produce a certificate of insurance as proof of professional liability coverage, or include it in the terms of a freelance contract.

Boosts you above the competition. Clients might choose to hire a general contractor who has professional liability coverage over one who is uninsured.

How does professional liability insurance coverage protect independent contractors?

Professional liability insurance covers the legal costs of lawsuits over the quality of your work, including:

  • Failure to deliver promised services
  • Professional negligence
  • Poor, incorrect, or incomplete work
  • Mistakes and oversights

This policy also protects against false allegations. For example, a client might blame an architect for a structural flaw caused by the client's own choice of materials. Professional liability coverage would pay for the architect's legal defense if the case went to court.

Compare quotes for professional liability insurance from top U.S. insurance providers

How does professional liability insurance work for the self-employed and independent contractors?

Sole proprietors and independent contractors can be held responsible for errors and oversights that financially harm their clients. If a client files a lawsuit, E&O covers your legal expenses, including a settlement or judgment.

If you don't have coverage, the businesses you work with might have to take on your legal costs – which is why they want you to be insured. For example, say an event planner hires your catering business for a client's convention and someone claims they got food poisoning. The client could name both parties in a professional liability lawsuit. If your catering company doesn't have coverage, the event planner might end up paying for your legal costs, including a settlement or judgment.

Your E&O policy gives your business partners and clients peace of mind, and may lead to them choose you over an uninsured competitor.

How much does professional liability insurance cost?

Businessperson calculating the cost of professional liability insurance.

Professional liability insurance costs a median of $59 per month. Your cost is based on a number of factors, including:

  • Your industry and risks
  • Coverage limits and deductible
  • Business income
  • Day-to-day operations
  • Claims history

Does your professional liability policy cover contractors hired by your business?

Unlike a general liability policy and some other policies, businesses and sole proprietors cannot extend their E&O coverage to independent contractors or subcontractors by naming them as an additional insured on their professional liability insurance. Instead, contractors must purchase their own insurance.

What other types of commercial insurance do independent contractors need?

Small business owners and independent contractors should consider additional business insurance policies, including:

Commercial auto insurance

Every state requires this coverage for vehicles that are registered to a business, or the ability to compensate someone in case of an auto accident. In the event of an accident, an independent contractor's commercial auto policy would cover the legal bills, medical expenses, and property damage.

For the self-employed and independent contractors, your personal auto insurance might not cover you when you drive your own vehicle for business use. If you drive your personal vehicle for work, you should consider hired and non-owned auto insurance (HNOA) to make sure you're protected.

Commercial property insurance

Commercial property insurance offers financial protection for your workspace and its contents, and is often required by landlords to sign a lease. If you own or rent a workspace, or if you have expensive equipment, inventory, and other business assets, commercial property insurance would help pay for the repair or replacement if your business property is stolen, damaged, or destroyed.

General liability insurance

If a client is injured at your workplace, it could result in an expensive lawsuit. If you operate your business out of your home, it’s unlikely that your renter’s or homeowner’s insurance would cover this.

General liability insurance gives you financial protection from such third-party accidents.

Business owner's policy

If you intend to buy both general liability and commercial property coverage, you can reduce your insurance costs by bundling them into a business owner’s policy (BOP). It combines both coverages under one policy, and usually has lower insurance premiums than buying each policy separately from the insurance company.

Workers' compensation

Workers' compensation covers medical costs and lost wages from work-related injuries and illnesses. It’s required in most states for businesses that have employees. Some independent contractors are required to have this coverage to work in riskier professions, such as roofing and building trades.

People who work for themselves and don’t have any employees generally aren’t required to have workers’ comp insurance, but it's still a good idea to carry coverage. Health insurance can deny claims for work-related injuries, which means you could end up facing medical bills and lost income while unable to earn a living.

You may also like
An IT technician completes a checklist in a server room.
8 claims tech E&O insurance can cover
Miscommunication, data breaches, and poor business protocols can lead to costly lawsuits for information technology consultants. Reduce your risk by protecting yourself with errors and omissions insurance (E&O) that covers these common claims.

Compare independent contractor insurance quotes with Insureon

Complete Insureon’s easy online application today to compare professional liability insurance quotes from top-rated U.S. insurers. Once you find the right policy for your small business, you can begin coverage in less than 24 hours.

Updated: May 24, 2022
Compare professional liability insurance quotes
Save money by comparing quotes from top-rated insurance companies.
What kind of work do you do?
Professional liability insurance lawsuit examplesWhat does professional liability insurance cover?When is professional liability insurance required?How much does professional liability insurance cost?Frequently asked questions about professional liability insurance