Professional Liability insurance

Professional liability insurance is a type of business insurance that can help protect your business if you’re accused of making a professional mistake or an act of professional negligence.

A client or customer can file a lawsuit against you if they think your professional error or inaction caused them financial loss. Coverage can help you pay for expenses if you’re at fault for a mistake or professional negligence. It can also help pay for defense costs if you're falsely accused.

Small business professional liability insurance can help you resolve these issues, avoid customer confrontations and protect your reputation if a customer claims you made a mistake — whether you did or not.

In some professions, professional liability coverage is called errors & omissions insurance (E&O insurance) or professional indemnity insurance.

Business professional liability insurance can be different for each profession, and each claim is unique.

Here are some examples** of how this policy can help protect different types of businesses: 

Accountants, bookkeepers and tax professionals

Your client sues you for making a mistake that led to them losing out on significant tax advantages and paying more than they had to. Professional liability for small businesses could help cover some of your defense costs.

Consultants

Many different types of consultants could be held liable if their professional advice leads to a loss for their clients. This includes business consultants, IT consultants and safety consultants. Without professional liability insurance, your business could be responsible for the full cost of legal defense and settlements.

Engineers

A client claims that the materials you recommended weren’t safe to use for their project. Professional liability coverage for engineers could help you defend yourself if you’re accused of making a mistake that causes someone to lose money.

Architects

A client alleges that a mistake you made in your designs led to the collapse of a stairwell and sues you for causing injuries. Your insurance could help cover the cost of damages if your business is at fault.

Professional liability insurance can cost as little as $19 monthly for low-risk businesses.†

The exact price depends on many factors specific to your business, including:

• The type of work you do.
• How many employees you have.
• The state where you work.
• Your claims history.
• How high you set your limits.
• Your work experience.

Insurance providers take many factors into account, including external economic conditions and market trends.

To get an idea of what you might pay, try our professional liability insurance cost calculator. But the best way to know for sure exactly what it will cost to cover your exact business is to start a free, no-obligation quote.

Learn more about the cost of professional liability insurance.

Professional liability coverage can help protect your small business from unexpected costs associated with:

Your business mistakes

You can follow all the rules, do everything right, check your work twice and still make a professional error. 

Professional liability insurance can help protect you from paying entirely out-of-pocket if you or your employees are accused of making a mistake that causes financial harm to another person or business.

Example: You're a property manager and the property owner claims you made repeated paperwork mistakes for transactions between tenants that cost the property owner $50,000.

The property owner sues you to get reimbursed. Your small business professional liability coverage could help cover some expenses up to the policy limit.

Accusations of professional negligence

Business professionals usually act in the best interest of their clients. 

However, you may find yourself accused of occupational negligence — doing or failing to do something that would be in the best interest of your client. If you’re in this position, whether you’re at fault or not, you could be forced to defend yourself if your business actions cause a client a financial loss.

Example: You did nothing wrong, but an angry client takes you to court for negligence. The legal battle draws out and the legal fees start piling up.

Your professional liability insurance policy could cover some expenses up to the limits of your policy.

Professional liability insurance coverage can provide help for a variety of situations, but it won’t protect you from all risks. Always check your policy for the full list of exclusions.

Here’s some examples of what professional liability won’t cover:

• Intentional wrongdoing and illegal activity: If you or one of your employees intentionally takes a shortcut that results in damage, neglects to comply with regulations or engages in bad behavior.
• Property damage or bodily injury: General liability insurance can help pay if your business is responsible for causing injury to someone who is not an employee or damaging property that doesn’t belong to you.
• False advertising: Professional liability won’t cover you If your marketing materials inadvertently contain misleading information about your product or services and you’re sued for false advertising. This could be covered by general liability.
• Employee work-related injuries or illnesses: Workers’ compensation insurance can help cover medical expenses and lost wages if an employee is involved in a work-related injury.
• Car accidents: Commercial auto insurance may help cover expenses if you drive for business and get into an accident.

NEXT offers coverage tailored to your business needs and the risks you face. And you can get a professional liability insurance quote and buy coverage online in about 10 minutes.

We’ll ask you some questions about your business and operations. Choose your coverage options, make your payment, and you’ll have instant access to your policy and your certificate of insurance (proof of insurance) immediately at no additional cost.

Start a free quote with NEXT.

We’ll walk you through the differences and similarities between professional liability and other types of coverage to help you make the best choice for your business.

• Professional Liability vs. General Liability
• Professional Liability vs. Errors & Omissions
• Liability insurance vs. Commercial Property insurance
• Compare other business insurance policies

Learn about professional liability insurance with more frequently asked questions about our coverage.

Our licensed, U.S.-based insurance advisors are ready to help if you have additional questions.

When you’re ready to explore coverage options for your business, you can get an instant quote online and purchase insurance within a few minutes.

Is Professional Liability insurance legally required?

Professional liability insurance for small businesses is typically not required for most professions. However, it can be required for lawyers in some states. Be sure to check the requirements in your area.

However, if you work on high-cost projects, your clients may require you to carry insurance so you have financial protection in case of a lawsuit. Though this insurance coverage may not be mandatory, it can signal your professionalism and help your business stand out amongst competitors.

Does Professional Liability insurance cover my subcontractors and employees?

Your professional liability policy can cover your employees, but only for the services they deliver for your business. It also depends on the details of your specific policy.

For example, if you own an architecture firm and one of your employees makes a project design mistake that causes costs and timelines to double, your professional liability insurance could help cover your legal fees if the client sues you.

What’s the difference between Professional Liability and E&O insurance?

Although they go by different names, professional liability and errors & omissions insurance (E&O insurance) can both help protect you if you’re accused of making a professional error that leads to a financial loss for a client.

The name can be different depending on your industry.

• Professional liability coverage is usually the choice for accountants, consultants, engineers and architects.
• Errors & omissions insurance is the professional standard for real estate and insurance agent professionals.

Can I add Professional Liability if I already have General Liability insurance or other coverage?

Yes. NEXT can give you up to a 10% discount when you add a professional liability policy to your existing coverage.

You can add professional liability insurance directly through your customer account. 

Do you offer prior acts coverage?

It depends on your industry and business operations. 

In some cases, we may provide prior acts coverage for businesses that have maintained continuous professional liability coverage at similar or higher limits since the requested retroactive date.

Can I add an additional insured to my Professional Liability policy?

Yes, NEXT customers can easily add an additional insured and share their certificate of insurance through their customer account. 

How do I file a Professional Liability claim with NEXT?

If you’re a NEXT customer, you can file a claim online or via the NEXT app. After we receive your claim, we’ll call you to go over the details.

If you’re not a NEXT customer, you can report a claim in our claim page.

File your claim as soon as possible, and be sure to have documentation nearby.