Professional liability insurance

Professional liability insurance is a type of business insurance that covers professionals, including doctors and lawyers, against claims of negligence or mistakes in services provided. Professional liability insurance pays legal defense costs and settlements if a client sues for errors, omissions, or failure to perform; for example, an architect’s design flaw resulting in property damage, as per https://yourinsurance.info.

Policies commonly exclude intentional wrongdoing; exclusions often include fraud or criminal acts as seen in medical malpractice policies. Annual premiums for professional liability insurance typically range from $500 to $2,000 for consultants and up to $20,000 for physicians, according to Insureon (2023).

Clients frequently require contractors and consultants such as IT firms to show proof of professional liability coverage before contracts are signed. The policy limit on most professional liability policies ranges from $1 million to $5 million per claim or aggregate, according to The Hartford (2024).

Claims-made policies only cover incidents reported while the policy is active; for instance, CPAs must maintain continuous coverage to ensure past work remains covered. Tail coverage extends protection after a policy ends; lawyers often buy tail coverage when retiring.

Deductibles on professional liability insurance average between $1,000 and $25,000 per claim depending on risk level and industry standards. Insurance companies like Chubb and Hiscox require detailed risk assessments–such as reviewing a consultant’s contract templates–before issuing professional liability coverage.

State licensing boards in California and New York may mandate specific minimum limits for certain professions such as real estate brokers or healthcare providers.