Professional Liability Insurance: What It Covers, Best Options

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- You should have professional liability insurance if you provide services to clients for a fee.
- It protects your business against claims of mistakes or professional negligence, even if they're unsubstantiated.
- Professional liability insurance is also called errors and omissions insurance.
- The median cost of professional liability insurance is $59 per month, according to Insureon.

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What does professional liability insurance cover?
- Professional negligence or failure to meet a standard of care. Say an architecture firm designs a branch for a local bank. A year later, the bank is sued by a customer because the branch’s bathrooms aren’t compliant with the Americans with Disabilities Act, or ADA. The bank could sue the architecture firm for failing to adhere to professional standards. Read more about architect insurance.
- Failure to deliver a promised service on time. Say a manufacturing plant hires an IT consultant to handle a cybersecurity upgrade. The consultant promises it’ll be finished by the end of the year, but they can’t stick to that timeline. In January — after the project was supposed to be completed, according to the contract — the plant gets hacked. The plant could sue the consultant to recoup the costs of recovering from the security breach. Read more about professional liability insurance for consultants.
- Breach of contract. If 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 that the agency violated that contract. Read more about E&O insurance for insurance agents.
- Errors. Medical malpractice insurance is a type of professional liability insurance that protects against claims of professional errors. For instance, if a nurse administers the wrong dosage of a medication to a patient, they could be sued by that patient or their family. Read more about how much medical malpractice insurance costs.
- General professional misconduct. If a college professor routinely grades one student harder than their peers and that student can’t graduate on time, that student or their parents might file a claim against the educator.

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NerdWallet Small Business helps you get realtime quotes from 30+ insurers, and instant access to your Certificate of Insurance (COI) through our partner, Coverdash.
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What isn’t covered by professional liability insurance?
- Bodily injury or property damage that customers or clients suffer while you’re doing business; for instance, if they trip and fall in your office or if their personal files are destroyed in a fire. Those are general liability insurance claims.
- Lawsuits filed by employees with allegations like wrongful termination or workplace harassment. For those, a business will need employment practices liability insurance.
- 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?
- 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.
How much is professional liability insurance?
- How common lawsuits are in your industry.
- 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.
How to find the best professional liability insurance
Chubb
The Hartford
biBERK
Hiscox
Article sources
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.