Professional Liability Insurance: What It Covers, Best Options
Businesses that provide services for a fee should have professional liability insurance.
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Professional liability insurance protects you if a client says you made a mistake or gave them bad advice. It’s also known as errors and omissions insurance.
If you provide services for a fee, you should have professional liability insurance.
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Best professional liability insurance companies
NerdWallet’s writers and editors choose the best business insurance companies based on factors like financial strength and complaint records. These are our top-rated insurers that offer professional liability insurance.
Chubb
Chubb sells professional liability insurance online to businesses with less than $2 million in revenue. Otherwise, you’ll need to work with an agent. Our editorial team gives Chubb high marks for its financial strength and its shopping experience. It also earned above-average marks for customer satisfaction in J.D. Power's 2025 U.S. Small Commercial Insurance Study. Read NerdWallet’s review of Chubb small-business insurance.
Ergo Next
Ergo Next is an online insurance company with a straightforward quoting and purchase process. Previously known as just “Next,” it rebranded as “Ergo Next” in January 2026. This was after its acquisition in 2025 by Ergo. a large German division of insurance giant Munich Re. Ergo Next is a great choice for sole proprietors and owner-operators who need coverage fast. Read NerdWallet’s review of Ergo Next small-business insurance.
The Hartford
The Hartford sells virtually every type of business insurance, including professional liability and E&O. You can get a quote on The Hartford’s website. Some businesses may be able to buy coverage online. Need personal advice? You can talk to an independent agent. Read NerdWallet’s review of The Hartford small-business insurance.
Travelers
Travelers can add professional liability insurance onto a business owner’s policy (BOP) — sometimes for no extra cost. This large insurer can also offer specialized coverage for high-risk industries. Use the Travelers website to find an independent agent near you. Read NerdWallet’s review of Travelers business insurance.
What is professional liability insurance?
Professional liability insurance is business insurance that protects you from lawsuits filed by the people to whom you provide services.
In general, if you have clients, they might sue you if they’re dissatisfied with your work. For example, a client might accuse you of overlooking deadlines, costing them additional money. Professional liability insurance can cover costs related to such a lawsuit.
What does professional liability insurance cover?
Professional liability insurance covers the cost of defending your business against claims in court. If you have to pay a settlement, it can cover that too.
Professional liability insurance protects your business whether or not legal claims have merit, so you should be protected even if a lawsuit is frivolous.
Here are some examples of when professional liability insurance can protect you:
- Professional negligence or failure to meet a standard of care. Say an architecture firm designs a branch for a local bank. A year later, a customer sues the bank because its bathrooms don’t comply with the Americans with Disabilities Act. The bank could sue the architecture firm for not adhering to professional standards.
- Failure to deliver a promised service on time. Say a manufacturing plant hires an IT consultant to upgrade its cybersecurity. The consultant promises to finish by the end of the year, but they can’t stick to that timeline. In January — after the project’s agreed-upon completion date — the plant gets hacked. The plant could sue the consultant for the costs of recovering from the security breach.
- Breach of contract. For example, an insurance agency’s contract says it will help clients settle claims. But, when the time comes, it doesn’t have enough staff to provide that service. Clients could claim the agency violated that contract.
- Errors. For example, an accountant reviews a business’s tax returns but misinterprets a new tax law. The IRS audits the business and finds that it owes back taxes, plus interest and penalties. That business could sue their accountant for the error.
- General misconduct. Say a college professor routinely grades one student harder than their peers. That student can’t graduate on time as a result. They or their parents might file a claim against the educator.
- Medical malpractice. Medical professionals should have this specific type of professional liability insurance. It protects against claims that they made mistakes that resulted in injury or death. Learn more about medical malpractice insurance here.
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What are the most common professional liability insurance claims?
That depends on your industry. Certain types of work are more prone to claims, and certain types of claims have bigger losses.
Here are examples from a few large industries:
Engineering and architecture
- Technical errors.
- Project management errors, like poorly negotiated contracts.
- Poor communication or documentation.
Law
- Technical errors.
- Project management errors, like poorly negotiated contracts.
- Poor communication or documentation.
Tax services
- Filing errors.
- Failure to give advice or improper advice.
- Failure to detect theft or fraud.
What does professional liability insurance not cover?
Professional liability doesn't protect a business against:
- Certain employee lawsuits. Allegations like wrongful termination or workplace harassment don’t fall under professional liability. For those, a business will need employment practices liability insurance.
- Data breach or cyberattack claims. You’ll need cyber insurance to protect against that risk.
- Fraud or criminal action. If you or one of your employees commits a crime or intentionally misleads a client, the resulting professional liability claim isn’t covered.
Who needs professional liability insurance?
Any business that provides professional services or advice to clients for a fee should have professional liability insurance. This list can include:
- Accountants.
- Architects.
- Consultants, including management and IT consultants.
- Engineers.
- Financial or investment advisors.
- Insurance and real estate agents and brokers.
- Software developers and graphic designers.
A single policy can cover you, your business entity and your employees. Independent contractors will need their own insurance. Individual coverage is also a legal necessity for some professions.
For instance, some states require medical professionals to carry medical malpractice insurance. Those policies specifically protect physicians, dentists, nurses, psychologists and other medical professionals against claims that they made a mistake that led to a patient’s injury or death.
State licensing bodies may also require lawyers to carry legal malpractice insurance or to tell clients whether or not they have it.
Professional liability insurance vs. general liability insurance
If you provide services to customers for a fee, you should get professional liability insurance. And NerdWallet recommends that pretty much all businesses carry general liability insurance.
People not affiliated with your business typically make general liability insurance claims. Those policies protect your business if you or your employees are accused of the following:
- Causing property damage.
- Causing bodily injury.
- Libel or slander.
Professional liability insurance protects against claims like bad advice or negligence, which are usually made by your customers or clients.
Most major commercial insurers sell both general liability and professional liability insurance. They’re two separate policies. But if you’re shopping for insurance online, you can probably buy both at the same time.
How much does professional liability insurance cost?
The median cost of professional liability insurance is $61 per month or $735 per year, according to online insurance marketplace Insureon.
Costs can vary widely, though.
For example, construction businesses with less than $1 million in revenue may pay up to $5,000 per year for professional liability coverage, according to data the online brokerage Coverdash shared with NerdWallet. For technology businesses, the maximum premium is about half that ($2,400). That’s because claims are more common in construction.
Premium costs also depends on:
- The location where you work and how common claims are there.
- How much coverage you need.
- How many employees you have.
- How long you’ve been in business.
- What kind of claims, if any, you’ve filed in the past.
- Your policy limit and deductible.
How much professional liability insurance coverage do you need?
The right amount of professional liability insurance varies. States that require it may have set minimums. For instance, health professionals in Kansas must have policies that cover at least $500,000 per claim and $1,500,000 per year.
When coverage isn't required, try to balance the annual cost of your policy with potential costs if a client sues you. You'll want enough to pay for any legal defense costs you couldn't handle out of pocket.
If you work in a high-risk industry, like construction or tax services, consider higher limits that could help cover settlement costs. Higher limits generally increase your premiums. But if you end up owing a judgment, it may be cheaper in the long run.
How much in damages will your professional liability policy cover?
Coverage amounts depend on your individual policy. But each has two types of limits.
- Per-occurrence limit: The maximum the policy will pay for any one claim.
- Aggregate limit: The maximum the policy will pay over its term. This is equal to or higher than the per-occurrence limit.
Your policy will display these numbers like “$500,000 / $1,000,000.” That policy would cover up to $500,000 in damages for a claim. But it won’t cover more than $1,000,000 for the policy period. That’s typically one year. When your policy renews, the limit resets.
Does professional liability insurance cover past work?
Typically, yes. But it depends on which of these two policy types you have:
- Claims-made policies: If a claim is filed against you while you have this policy, it provides coverage. It doesn’t matter when the actual incident took place. This is normal for professional liability insurance.
- Occurrence policies: These policies cover claims for work you did while the policy was in effect. They still protect you even if the claim is filed after you cancel your policy. This is more common in general liability insurance.
One last thing to look for: prior acts coverage. Policies with a prior acts date or retroactive date cover claims after that date. Anything before it isn’t covered.
For instance, say your professional liability policy runs from Jan. 1, 2026, through Dec. 31, 2026. During that time, a client sues you for work you did in 2024. A claims-made policy would still cover you. But it wouldn’t if the insurer included a prior acts date of Jan. 1, 2026.
Policies that cover longer time periods tend to be more expensive.
How to get professional liability insurance
Follow these steps to get a professional liability insurance policy:
- Find out what coverage you must have. Does a state, licensing board or client require that you have a certain type or amount of coverage? If you belong to a professional association, they probably have this information.
- Decide how much coverage you need. You’ll need this information when you start getting quotes, since it affects the price of your policy. Is a baseline level of coverage enough, or is your industry prone to expensive lawsuits? Have you been operating for a while without insurance and want coverage for past events?
- Get an agent, if you want one. If you want someone else to handle the rest of this process, find an agent or broker. They’ll ask questions about your business, get you quotes from several insurance companies and then help you buy a policy. Working with an agent may be slower and a little more expensive than buying coverage online, but their expertise may be worth it.
- Get multiple quotes. Every insurance company has its own pricing formulas, which means each will charge you a different price.
- Compare coverage. It’s easy to see which policy charges the lowest premiums. But double-check the policy limits and deductible, along with the period of time it covers. Compare exclusions, too — one policy might cover a situation that another policy does not.
Article sources
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- 1. National Society of Professional Engineers. Professional Liability Trends Every Design Professional Should Know. Accessed Jan 21, 2026.
- 2. Business Wire. EPIC Law Firm Group Releases Key Trends Driving Law Firm Malpractice Insurance Claims in Annual Survey. Accessed Jan 21, 2026.
- 3. Journal of Accountancy. Malpractice claims in 2021 and future predictions. Accessed Jan 21, 2026.
- 4. J.D. Power. More Small Businesses Consider Dropping Their Insurers, J.D. Power Finds. Accessed Jan 21, 2026.
- 5. Insureon. Professional Liability Insurance Cost. Accessed Jan 21, 2026.
- 6. Kansas Association of Insurance Agents. Changes to Kansas Health Care Stabilization Fund. Accessed Jan 21, 2026.
Methodology
Business insurance ratings methodology
NerdWallet’s business insurance ratings reward companies that offer small-business owners reliability and ease of use. Ratings are based on weighted averages of scores in several categories, including financial strength, customer complaint data, shopping experience and customer service. Learn more about how we rate small-business insurance companies.
These ratings are a guide, but insurance policy details and prices can vary widely from business to business and provider to provider. We encourage you to shop around and compare several insurance quotes.
NerdWallet does not receive compensation for any reviews. Read our editorial guidelines.
Insurer complaints methodology
NerdWallet examined complaints received by state insurance regulators and reported to the National Association of Insurance Commissioners in 2018-2021.
To assess how insurers compare to one another, the NAIC calculates a complaint index each year for each subsidiary, measuring its share of total complaints relative to its size, or share of total premiums in the industry. To evaluate a company’s complaint history, NerdWallet calculated a similar index for each insurer, weighted by market shares of each subsidiary, over the three-year period.
Our star ratings consider ratios for both general liability insurance and commercial property insurance. When an insurer sells policies that are underwritten by several different insurance companies, we consider the NAIC complaint ratios of all the underwriters.
On this page
- Best professional liability insurance companies
- What is professional liability insurance?
- What does professional liability insurance cover?
- What does professional liability insurance not cover?
- Who needs professional liability insurance?
- How much does professional liability insurance cost?
- How much professional liability insurance coverage do you need?
- Does professional liability insurance cover past work?
- How to get professional liability insurance
