Professional Liability Insurance

Protecting Yourself from Costly Mistakes with Professional Liability Insurance

Because even the pros mess up sometimes.

Professional liability insurance

No matter how many years of experience you have under your belt, no one is perfectly immune to mistakes. For professionals who offer advice, or otherwise treat or diagnose clients, professional liability insurance is the policy that will protect you and your business practices from a lawsuit.

One of our independent insurance agents can help you get equipped with the right professional liability insurance. They'll guide you on which policy is right for your business or practice and different risk exposures that could befall your business. But first, here's a deep dive into this critical coverage.

What Is Professional Liability Insurance?

Also called errors & omissions (E&O) insurance, professional liability covers your business against lawsuits stemming from claims of harm done to a third party by your professional services. Business professionals who offer various services to the public, such as lawyers, realtors, accountants, etc., need this coverage.

Professional liability insurance protects your business against many different kinds of claims, including copyright infringement, bodily injury, property damage, negligence, and more. It also guards against professional omissions, or things you should have done, but didn't.

How Does Professional Liability Insurance Work?

Professional liability insurance comes in several forms, including medical malpractice insurance for professionals who work with the human body (e.g., physicians, nurses, pharmacists, and beauticians), and E&O coverage for real estate professionals. This coverage is not provided by regular commercial general liability insurance, or standard business insurance policies. 

Unless you purchase tail coverage, professional liability insurance only covers your business for claims that arise from the time when your policy is active, and lawsuits can still be filed against you years later. However, tail coverage can help extend your protection, typically by increments of one year after your professional liability coverage ends.

What Does Professional Liability Insurance Cover?

There are a couple different types of professional liability insurance. The one you need will be based on what you do and provide to customers or clients. The most common forms include:

  • Malpractice insurance: Designed for medical professionals such as psychiatrists, podiatrists, and gynecologists. It protects against lawsuits that allege negligence or mistakes. If you work in the healthcare industry, malpractice insurance should be the first policy you obtain.
  • Errors and omissions liability insurance: Designed for professionals who provide advice or services such as lawyers, consultants, insurance agents, and architects. It protects against lawsuits that claim a financial loss occurred based on bad information or negligent advice.

There are also two kinds of professional liability policy coverage types:

  • Claims-made policies: This coverage must be in effect both when the lawsuit is filed and when the incident in the suit took place. This type of policy is the most common, and is usually less expensive.
  • Occurrence policies: Cover any incident that takes place during the coverage period, even if the actual lawsuit is filed after the policy expiration. This type of policy provides more comprehensive coverage and is more expensive.

Professional liability insurance protects your business against claims of negligence, misrepresentation, inaccurate advice, and various omissions. An independent insurance agent can answer any questions you have about liability policies and can help steer you toward the right protection for your career and your livelihood.

professional liability

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What Doesn't Professional Liability Insurance Cover?

Though professional liability insurance provides a ton of critical coverage, it also has its own exclusions. Professional liability insurance will not protect your business from claims of:

  • Personal property damage or bodily injury: These are covered by a general liability policy.
  • Data breaches and related lawsuits: You'll need a cyber liability policy to cover your business for cyber incidents.
  • Employee injuries/illnesses: A workers' compensation policy is necessary to protect against employee injury, illness, or death on the job.

An independent insurance agent can help address any concerns you may have about the exclusions under your professional liability insurance policy.

Who Sells Professional Liability Insurance?

Professional liability insurance is available from many different insurance companies, and the best way to find the right carrier for you is through working with an independent insurance agent. Independent insurance agents know which insurance companies to recommend to meet your needs, and can provide informed suggestions based on company reliability, rates, and more.

While many insurance companies could provide professional liability insurance for you, finding coverage could also depend on the area you live in. Here are a few of our top picks for professional liability insurance.

Progessive 5 stars

The Hartford 5 stars

Hiscox 4 stars

Nationwide 5 stars

One professional liability insurance company outshines its competitors.

Best overall professional liability insurance company: The Hartford

The Hartford offers comprehensive professional liability insurance for businesses to protect against:

  • Negligence
  • Errors in services given
  • Omissions
  • Misrepresentation
  • Violation of good faith and fair dealing
  • Inaccurate advice

Though several insurance companies offer professional liability insurance, The Hartford provides the most comprehensive coverage around. The Hartford also has "A+" (superior) ratings from both AM Best and the Better Business Bureau. Overall, The Hartford earns its spot as our top pick for professional liability insurance.

Who Needs Professional Liability Insurance?

Pretty much any professional that could cause harm to the public through their services needs professional liability coverage. These include:

  • Counselors
  • Accountants
  • Real estate agents
  • Consultants
  • Lawyers
  • Engineers
  • Architects

An independent insurance agent can help you determine if your business needs to be equipped with professional liability insurance.

Types of Protection Provided by Professional Liability Insurance

Professional liability coverage comes with two major types of protection for businesses, including:

  • Defense costs: Professional liability insurance covers your business in the event of a lawsuit by paying defense costs, such as attorney and court fees.
  • Alleged or actual negligence: Professional liability insurance also protects businesses from claims of actual or alleged negligence, including various types of errors and omissions. Negligence and professional errors can include failure to complete a service or giving harmful advice to a paying client.

Without the right professional liability insurance, your business could end up in a lot more than just reputational trouble when faced with a lawsuit.

How Much Does Professional Liability Insurance Cost?

The cost of your professional liability insurance policy will depend on several factors, including which exact type of coverage you need. Check out these factors for one major form of professional liability insurance, medical malpractice insurance, below.

Direct premiums of medical professional liability insurance market U.S. by state 

[image: Statista XLS doc, attached - may want to rework to show all the states, or just crop to show the most expensive]

In the last few years, the professional liability insurance market in New York took in $1.62 billion in premiums. Next highest on the list was California, which generated about $758 million in professional liability premiums.

Today, the median annual cost of professional liability insurance is $713. Your policy's cost may vary depending on the risk level of your specific profession, though. An independent insurance agent can help find exact quotes for your area.

Why You Should Buy Professional Liability Insurance

Do I need professional liability insurance

Not having the proper coverage for your business practices can be a costly mistake. Getting professional liability insurance from your trusted insurance advisor is the quickest way to rectify any risk exposures beforehand.

In any lawsuit, no matter whether it ends up in court or settled prior to, it will be expensive to resolve. Professional liability insurance is designed to help protect you from what could be a serious financial burden.

Professional liability insurance is designed to protect businesses against professional errors that cause harm to the public. It provides coverage beyond what's included in a general liability insurance policy. Claims of negligence and more are covered by professional liability insurance.

The cost of professional liability insurance depends on several things, including your specific occupation, as well as your exact location. However, the median annual cost of professional liability insurance is $713.

Professional liability insurance protects your business against claims of negligence, misrepresentation, inaccurate advice, and various omissions. It pays for legal and defense costs if you are sued for any of these claims.

Counselors, accounts, real estate agents, lawyers, architects, and any other professionals who offer services that could cause harm to the public need professional liability insurance.

There is no difference between professional liability insurance and errors & omissions insurance, in fact, the two terms are used interchangeably. 

professional liability

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Our independent agents shop around to find you the best coverage.

The Benefits of an Independent Insurance Agent

When it comes to helping insurance customers find the absolute best price and quality for LLC coverage, no one’s better equipped to help than an independent insurance agent. Independent insurance agents search through multiple carriers to find providers who offer LLC insurance, deliver quotes from a number of different sources and help you walk through them all to find the best blend of coverage and cost, all working for you, free of charge.

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TrustedChoice.com Article | Reviewed by Jeffrey Green

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