Professional Liability Insurance

What is professional liability insurance?

Professional liability insurance covers claims that your work caused a client to lose money. It's also called errors and omissions (E&O) insurance. In medicine, it's called malpractice insurance. Outside the U.S., it's often called professional indemnity insurance.

It can cover claims of:

1. Negligence, or a mistake in your work
2. Errors or omissions in a service you provided
3. Bad or incomplete advice
4. Missed deadlines that cost a client money
5. Misrepresenting what you would deliver

Coverage can help pay for an attorney, court costs, and settlements. It can help even if the claim has no merit.

Who carries professional liability insurance?

Many people who give professional advice or services carry professional liability. Some carry it because the law or a contract asks for it. Doctors and lawyers are common examples.

Other professions that often carry it include:

1. Consultants and business advisors
2. Accountants and bookkeepers
3. Real estate agents and brokers
4. Architects and engineers
5. IT pros, developers, and web designers
6. Marketing and design agencies
7. Insurance agents and appraisers

Professional liability for medical professionals

For doctors, nurses, dentists, and chiropractors, professional liability is usually called malpractice insurance. Lab and medical testing staff often carry it too. Because patient injury is a risk in these jobs, many employers and states ask for this coverage. Learn more about medical malpractice insurance.

Professional liability for consultants

Consultants, insurance adjusters, realtors, and appraisers often carry errors and omissions (E&O) insurance. E&O covers claims of real or alleged mistakes in their work. See professional liability insurance for consultants.

Professional liability for technology businesses

Policies are often written for a specific industry. Tech companies, developers, web hosts, and software firms can get coverage built for their work. Some add options like data breach, intellectual property, or breach of warranty coverage.

What does a professional liability claim look like?

Mistakes happen, even to careful professionals. And anyone can file a claim, even one with little to do with you. Lawsuits can take months or years to end. Defense costs can add up even if you win. One large claim can hurt a small business. Professional liability can help cover these costs so you can keep working.

Example #1: You run a consulting firm. A client follows your advice but puts it into practice the wrong way. They lose income and sue you. Professional liability can help cover your defense costs.

Example #2: You build a website for a client. Later, the site is hacked and customer data is exposed. The client says your work was at fault. Professional liability can help cover defense, a settlement, and possibly credit monitoring for those affected.

Example #3: You're a real estate agent. Your client moves in, and a pipe bursts the same day. They sue you, but their contract shows they waived the inspection. You may win in court. Professional liability can still help cover your defense costs.

Example #4: You're an accountant. A client finds an error in their books that cost them money. Professional liability can help cover the damages and your legal costs.

General liability vs. professional liability: what's the difference?

We are often asked is, “What is the difference between general liability and professional liability insurance?". 

General liability covers claims of bodily injury, property damage, or personal injury to a third party. For example, a client slips and falls in your office.

Professional liability covers claims that your professional work caused a financial loss. For example, a client says your advice cost them money.

Many businesses carry both. A licensed partner can explain which ones apply to your work. See our full guide to general liability vs. professional liability.

How much does professional liability insurance cost?

There's no single price. The cost depends on your work and your risk.

Common factors include:

1. Your industry and the services you offer
2. Business size and yearly revenue
3. Years in business and claims history
4. Number of employees
5. Coverage limits and deductible
6. Where you operate

Limits are often sold in million-dollar amounts. Deductibles can range from $1,000 to $25,000 per claim. Want real numbers? See what consultants paid for general liability, based on Tivly partner data.

What are claims-made policies and retroactive coverage?

Most professional liability policies are claims-made. That means the claim must be filed while your policy is active.

A retroactive date can extend coverage to work you did before the policy started. Not every insurer offers it.

If you cancel or switch policies, ask about an extended reporting period, also called tail coverage. It lets you report claims after the policy ends, for work done while it was active. Without it, a later claim may not be covered.

How does Tivly match me with a licensed partner?

Tivly matches small businesses with 450+ licensed partners in all 50 states. It's free to use. Complete the form at the top of the page, and a Tivly specialist will reach out to match you with a licensed partner. Or call 877-907-5267 to speak with a representative.

Reviewed By: Sarah Reid, Licensed Agent