Professional Liability Insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, helps small businesses cover costs if a client sues over unsatisfactory work.
Choose the right coverage from trusted insurance providers.
Why Small Businesses Need Professional Liability Insurance?
Running a business that relies on expertise means even the most experienced and thorough professionals can make mistakes. A single error in work can cost clients valuable revenue, leading to frustration and, in some cases, lawsuits. For a professional service provider, missing a project deadline, making an omission, or giving ineffective business advice can be enough for an unsatisfied client to sue.
That’s where professional liability insurance steps in. This type of contingent liability insurance helps protect businesses from financial risks tied to legal claims. If a lawsuit is filed, the policy will cover legal defense costs up to the policy limit, ensuring the business can focus on its work without worrying about devastating legal fees.
Additional Coverages to Consider
Protect your business from unexpected risks with these essential coverages:
General Liability Insurance
Covers customer injuries, property damage, and advertising claims. Helps with legal costs and is often required for leases and contracts.
Under this plan
Customer injuries
Business interruption incidents
Accidental damage to customer property
Workers’ compensation insurance
Covers medical expenses and lost wages for work-related injuries or illnesses. Required in most states for businesses with employees.
Under this plan
Employee medical expenses
Disability benefits
Workplace injury lawsuits
Commercial auto insurance
Protects business vehicles by covering accident-related legal costs, medical bills, and property damage.
Under this plan
Car accidents
Vandalism and theft
Weather damage
Cyber insurance
Covers expenses from cyberattacks, data breaches, and legal fees, ensuring your business stays secure online.
Under this plan
Data breach investigations
Customer notification expenses
Fraud monitoring services
What Does Professional Liability Insurance Cover?
If a client sues over a mistake made by your business, professional liability insurance helps cover legal defense costs, including attorney fees. It provides protection for:
Work mistakes and oversights
If an error causes a client to lose revenue, this insurance can help pay legal fees and settlements.
Undelivered services
If you fail to deliver promised work, a client may sue, especially if it affects their profits.
Accusations of negligence
Clients expect a professional service provider to meet industry standards. Failing to do so may result in a lawsuit for negligence.
Breach of contract
If a client believes you didn’t fulfill an agreement, E&O insurance can help protect against contract-related lawsuits.
Missed deadlines
Not meeting a project deadline can cause financial harm to clients, leading to potential legal action.
How Much Does Professional Liability Insurance Cost?
On average, professional liability insurance costs $61 per month, with 32% of Eagle Nation’s small businesses paying under $50. Your policy cost depends on:
Business size
Claims history
Industry and risks
Day-to-day operations
Coverage limits and deductibles
Who Needs Professional Liability Insurance?
Professional liability insurance, also known as professional indemnity insurance, is essential for businesses and independent contractors who offer expertise-based services. Some industries are even legally required to have this coverage.
Professions That Commonly Need Coverage
IT and Technology Professionals
Also called tech E&O insurance, this covers lawsuits for mistakes, oversights, or negligence. If an error causes a server crash, this policy helps with legal defense costs. It often includes cyber insurance for data breach-related lawsuits.
Professional Services
Covers professionals like notaries and travel agents against negligence claims, poor advice, or misrepresentation.
Consultants
Protects against lawsuits from clients claiming ineffective advice or wrong projections. Some clients may require proof of insurance before hiring.
Healthcare Professionals
Also known as medical malpractice insurance, this covers legal expenses if a patient sues over negligence. Some states and employers mandate this coverage.
Accountants and CPAs
Covers lawsuits from accounting errors, miscalculations, or lost documents. Clients may require proof of insurance before working with an accountant.
Architects and Engineers
Protect against lawsuits for design flaws, cost overruns, or missed deadlines. Often required for licensing and contract eligibility.
How to Get Proof of Professional Liability Insurance
Fill out our simple online application to get free quotes. Our expert agents will help you find affordable coverage tailored to your business needs.
You can usually secure coverage quickly and receive your insurance certificate the same day.
What Professional Liability Insurance Doesn’t Cover
While this insurance covers legal defense costs, it has certain exclusions:
Lawsuits You File
It only covers lawsuits filed against you, not ones you initiate.
Past Incidents
Unless you have prior acts coverage, it only covers claims for incidents after the policy starts.
Bodily Injury & Property Damage
General liability insurance covers customer injuries and property damage.
Employee Injuries
Workers’ compensation insurance covers medical costs and lost wages for injured employees.
Employee Discrimination Lawsuits
Employment practices liability insurance (EPLI) covers claims like harassment or wrongful termination.
Illegal Activities
Any intentional wrongdoing or illegal acts are not covered.
Product-Related Harm
Product liability insurance covers injuries or damage caused by your product. Tech E&O insurance covers financial loss from software-related issues.
Two ways to start your coverage
Quotes online
Talk to an agent
Verified workers' compensation insurance reviews
Hear from customers like you who purchased insurance.
FAQs about Professional Liability Insurance
You may need this coverage in two main cases:
- Client Contracts – Some clients require proof of insurance before signing a contract to ensure they’re protected from potential losses due to mistakes.
- Professional Licenses – Many states mandate insurance before approving certain professional licenses.
Having a certificate of insurance helps build trust with clients, licensing boards, and other stakeholders by showing you’re financially prepared to cover any errors in your work.
Yes, they are the same. Different industries use different names for identical coverage:
- E&O Insurance: Common for insurance agents, real estate agents, tax preparers, and IT professionals.
- Malpractice Insurance: Used by lawyers (legal malpractice) and doctors (medical malpractice).
Both cover small business risks, but they protect against different claims:
- General Liability: Covers bodily injuries, property damage, and advertising-related claims.
- Professional Liability: This covers legal costs if a client experiences financial loss due to your services or advice.
- General Liability Insurance – This covers injuries to clients or third parties on your property and legal costs if they sue.
- Workers' Comp Insurance – Covers medical expenses and lost wages for employees injured on the job.
This insurance covers legal costs if a client sues you for failing to meet expectations.
- To file a claim, contact your insurer with details of the incident and your policy number.
- Most policies are claims-made, meaning your policy must be active both when the mistake happened and when the claim is filed.
- To cover past work, you can request a retroactive date on your policy. Maintaining continuous coverage prevents out-of-pocket lawsuit costs.
For more details, check our FAQs on professional liability insurance. If you have specific questions about coverage or risk management, contact an Eagle Nation agent for assistance.
Eagle Nation's professional liability insurance gives me peace of mind. As a consultant, knowing I'm covered for potential legal issues like missed deadlines or contract disputes is a huge relief!