Professional Liability Insurance

professional liability insurance
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What Is Professional Liability Insurance?

Professional liability insurance protects businesses when employees make mistakes in the professional services they’ve provided to customers or clients. This coverage is also known as errors and omissions insurance (E&O). Even if you’re an expert in your business, mistakes happen. And if your client or customer thinks a mistake in your professional services caused a financial loss, they can sue you.

What Does Professional Liability Insurance Cover?

Professional liability insurance for small businesses can help protect against claims of:
  • Negligence: If services you or your company provided result in damage or injury to a client.
  • Misrepresentation: If a client claims that false or misleading information convinced them into a contract agreement with you or your company, which lead to damages to the client.
  • Inaccurate advice: If a customer claims you provided advice that caused them damage.
  • Personal injury: If someone accuses you or your business of libel or slander, whether it’s true or not.
  • Copyright Infringement: If someone claims you or your business used their copyrighted work without their permission.
  • Defense costs: Professional liability insurance can help cover your defense costs if a client sues you for mistakes in the professional services you provided them. Defense costs include attorney fees and other court-related expenses.
Even if you didn’t do anything wrong and believe you’ve made no mistakes, your client can still sue your business. Without coverage, you’ll have to pay expensive legal defense costs out of pocket.
Professional liability insurance can help your business if:
  • Your accounting firm makes a clerical error that costs your client thousands of dollars.
  • A client sues your florist shop for errors in the services you provided after you failed to deliver flowers on time for their wedding.
  • Your real estate firm recently sold a townhouse to a couple that was planning on starting a daycare. However, when the couple moved in, the townhouse association informed them they couldn’t use the property for a business. The new owners decide to sue you for negligence.

What Professional Liability Insurance Doesn’t Cover

Professional liability insurance doesn’t cover every kind of claim. It won’t help your business with claims of:
  • Bodily injury or property damage: You’ll want to get a general liability insurance policy to help cover claims that your business hurt somebody or damaged their property.
  • Work-related injuries or illnesses: If your employees get hurt or sick from their job, you’ll need a workers’ compensation insurance policy to help them recover and return to work.
  • Data breach: If your business loses personally identifiable information (PII), data breach insurance can help you respond to the breach. Some insurers call this coverage cyber liability insurance.

How Professional Liability Insurance Works

Many insurance companies write a professional liability insurance policy on a claims-made basis with a retroactive date and extended reporting period.
The retroactive date means you’re covered for incidents that happen on or after a specified date in your policy.
The extended reporting period helps cover claims filed within a certain time after your policy expires. This is generally a 30- to 60-day period, but you can extend this period to a year or more for an additional cost.
Your insurance company only covers claims against your business during your policy period within the extended reporting period. And the claim must be from a covered error or omission that happened after your policy’s retroactive date. It can help cover:
  • Damages
  • Legal defense costs
  • Disciplinary proceedings
  • Loss of earnings
  • Subpoena assistance
Some policies can also be written on an occurrence policy. This means there will be coverage for losses that happen during your policy period, even if the claim gets reported after your policy expires.
professional liability insurance claims made example


Since the claim was reported during the policy period and the loss occurred after the retroactive date, it would be eligible for coverage under a claims-made policy.
If a claim is brought after the policy’s expiration, it can get coverage if it’s reported within the extended reporting period.

Who Should Get a Professional Liability Policy?

You may be wondering who needs professional liability insurance. It’s an important coverage that business owners who provide a service to a client or customer should have. You’ll want to get professional liability insurance coverage if you:
  • Have to sign a contract that requires you to carry coverage
  • Offer professional services directly to customers
  • Regularly give advice to clients
Be aware that some states require this type of business insurance.
Even insurance agents need liability protection, which is why The Hartford offers E&O insurance for insurance agents.
who needs professional liability

A Big Help for Small Business Owners

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Interior Design Business

Jane owns an interior design business. Recently, a client's custom furniture didn't fit and now Jane is being sued. Luckily, Jane is an insured professional and has a Business Owner's Policy with professional liability insurance, which will help pay for her legal fees.
Many small business owners don’t realize the big benefits of professional liability insurance.
information technology professional liability insurance
IT Professionals are required to carry general liability insurance.
professional liability insurance for healthcare professionals
States and hospitals require healthcare professionals to carry professional liability insurance.
How Does It Help?
Professional liability insurance protects against common claims like negligence, misrepresentation and inaccurate advice. It will also help cover violations of good faith and fair dealing. If a client sues you, this policy may help pay your legal expenses.
To learn more about professional liability insurance, get a quote from us today.
professional liability insurance coverage

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How Much Does Professional Liability Insurance Cost?

Your cost is unique to your business. What you pay for professional liability insurance will vary by product, limits chosen and risk class or hazard group of your business.
Product Avg. Minimum Monthly Premium***
Misc. Professional Liability Standalone Coverage $300
Misc. Professional Liability Endorsements $150
Architects and Engineers Professional Liability $1,700
Healthcare Professionals Professional Liability Varies depending on type of practice, $300-$1,500
Errors & Omissions Insurance for Technology Companies Varies by state, $350-500
*** Quotes will vary by business depending on the size of your business, the state your business is located in, coverage limits chosen, and the risk class your business is associated with.
Factors that can impact your professional liability insurance cost include:
  • Policy details, like coverage limits
  • Type of business
  • Location
  • Business size, number of employees and clients
  • Years in business
  • Claims history
When you’re ready to get a professional liability insurance quote, it’s a good idea to have important business documents on hand, such as:
  • Copies of contracts
  • Documentation procedures
  • Any information about previous errors and omissions coverage
  • Quality control processes
  • Employee training initiatives
You can work with our specialists to get the right amount of errors and omissions (E&O) insurance coverage for your business. Backed by more than 200 years of experience, we can help protect you with professional liability insurance for small business.
professional liability

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Professional Liability Insurance FAQs

The main difference between general liability and professional liability is in the types of risks they cover. General liability insurance covers physical risks, such as bodily injuries and property damage. Professional liability insurance covers more abstract risks, such as errors and omissions in the services your business provides. To make sure your business is fully protected, it’s a good idea to carry both types of insurance.
Yes, professional liability insurance coverage can help protect your business even if the claim against your business is determined to be baseless.
If your business offers professional services and you don't have professional liability coverage, you can be held liable if a customer believes you made a mistake. Even if it didn’t cause them financial loss, you can still get sued.
The two main types of professional liability insurance coverage are claims-made and occurrence.
If the professional liability policy is written on a claims-made basis it has a retroactive date and extended reporting period. The retroactive date covers incidents that happen on or after a specified date in your policy. The extended reporting period helps cover claims filed within a certain time after your policy expires.
For an occurrence policy, you’ll have coverage for losses that happen only during your policy period, even if the claim gets reported after it expired.

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The Hartford shall not be liable for any damages in connection with the use of any information provided on this page. Please consult with your insurance agent/broker or insurance company to determine specific coverage needs as this information is intended to be educational in nature.
The information contained on this page should not be construed as specific legal, HR, financial, or insurance advice and is not a guarantee of coverage. In the event of a loss or claim, coverage determinations will be subject to the policy language, and any potential claim payment will be determined following a claim investigation.
Certain coverages vary by state and may not be available to all businesses. All Hartford coverages and services described on this page may be offered by one or more of the property and casualty insurance company subsidiaries of The Hartford Financial Services Group, Inc. listed in the Legal Notice.
The Hartford Financial Services Group, Inc., (NYSE: HIG) operates through its subsidiaries under the brand name, The Hartford, and is headquartered in Hartford, CT. For additional details, please read The Hartford’s Legal Notice.
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