Professional Liability Insurance in Michigan
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Professional liability insurance in Michigan

Professional liability insurance, also called errors and omissions insurance (E&O), protects small business owners against the cost of client lawsuits over unsatisfactory work. This insurance coverage isn't required by Michigan law, but you may need it for client contracts.

What is covered under professional liability insurance in Michigan?

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 client claims for many Michigan 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.

Architects and engineers who work on state or government projects in Michigan are typically required to carry an E&O policy.

What are Michigan’s professional liability insurance requirements?

Michigan law does not require small business owners to have a professional liability insurance policy. However, you might need this coverage to sign a contract or to get a license in your field.

Healthcare professionals

Professional liability is referred to as medical malpractice insurance when it applies to doctors and other healthcare professionals, such as therapists. Michigan state law does not require medical professionals to carry this coverage.

However, you may need malpractice insurance to work in a specific hospital or other healthcare facility.

Building design professionals

Architects and engineers who work on state or government projects in Michigan are typically required to carry an E&O policy.

For example, architects working with the Michigan State Housing Development Authority (MSHDA) must carry errors and omissions coverage [PDF] equal to either $1 million or 10% of the construction contract amount, whichever is the greater number, and list MSHDA as an additional insured.

Real estate professionals

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


For lawyers, professional liability is also known as legal malpractice insurance. Though it's not required by law in Michigan, it's considered a best practice and also required to participate in the State Bar of Michigan's Lawyer Referral Service.

Get professional liability insurance for your Michigan business

Who should carry professional liability insurance in Michigan?

Any business 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.

Contractors and construction businesses

Construction and contracting professionals, 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 Michigan?

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 Michigan, 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 Michigan?

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 of 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.

This policy can be very affordable for small businesses in Michigan. Contact an insurance agent if you need help choosing the right coverage limits or other options.

Are there any exclusions in professional liability insurance?

A professional liability policy covers a wide range of lawsuits, but it will not 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 does not include professional liability coverage—they are both different types of business liability insurance. Commercial general liability covers common business risks and liability claims such as customer bodily injuries, customer property damage, and advertising injuries.

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

Read more about general liability vs. professional liability insurance.

What other types of insurance should MI businesses consider?

General liability and professional liability are often the first two policies bought by small business owners. However, they are not the only coverage you might need.

Workers’ compensation insurance is required for Michigan businesses that have employees. Workers' comp covers medical costs and lost wages for work-related injuries and illnesses.

Commercial property insurance covers your business property, including your building. 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 Michigan for all commercial vehicles. It covers the cost of an accident involving your business vehicle.

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

Employment practices liability insurance (EPLI) protects against lawsuit expenses related to claims of harassment, discrimination, and wrongful termination that professional liability typically won’t cover.

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Professional liability vs. errors and omissions insurance
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How do I get professional liability insurance for my Michigan small business?

Complete Insureon’s easy online application today to compare 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 Michigan business insurance, you can begin coverage in less than 24 hours.

Updated: July 26, 2023
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