Running a business or working as a professional comes with responsibilities—and risks. Even the most skilled experts can face lawsuits from dissatisfied clients.
That’s why having professional liability insurance is essential. Also known as Errors and Omissions (E&O) insurance, this coverage protects professionals against claims of negligence, mistakes, or failure to deliver services as promised.
In this article, we’ll explore what professional liability insurance coverage includes, who needs it, average costs, and the best professional liability insurance companies to consider in 2025.
What is Professional Liability Insurance?
Professional liability insurance is a specialized type of business insurance that protects professionals from claims made by clients for financial losses caused by:
- Errors or mistakes in professional services
- Failure to meet contractual obligations
- Negligence in performing duties
- Misrepresentation or inaccurate advice
Unlike general liability insurance (which covers bodily injury or property damage), professional liability insurance policies specifically focus on financial losses caused by professional errors.
Who Needs Professional Liability Insurance?
Not just large corporations—many professionals and small business owners need this coverage. Professions that benefit from E&O insurance include:
- Doctors and Healthcare Providers – For malpractice and negligence claims.
- Consultants and Advisors – For errors in professional advice.
- Lawyers and Legal Professionals – For claims related to legal misrepresentation.
- Architects and Engineers – For construction design flaws or project errors.
- Accountants and Financial Advisors – For mistakes in financial reporting.
- IT Professionals and Software Developers – For technology-related service failures.
- Freelancers and Contractors – For project-based errors and contract disputes.
Essentially, anyone offering professional services should consider professional liability insurance coverage to avoid costly lawsuits.
What Does Professional Liability Insurance Cover?
Typical professional liability insurance policies cover:
- Negligence Claims – When a client accuses you of not performing duties properly.
- Legal Defense Costs – Covers attorney fees, court expenses, and settlements.
- Breach of Contract – Failure to meet client expectations or deadlines.
- Misrepresentation – Claims of providing incorrect information.
- Copyright Infringement – Protects against claims related to intellectual property.
However, it usually does not cover:
- Criminal acts or intentional wrongdoing
- Bodily injury or property damage (covered by general liability)
- Employee lawsuits (covered by employer liability insurance)
Benefits of Professional Liability Insurance
Having the right professional liability insurance coverage provides several advantages:
- Financial Protection – Avoid paying huge out-of-pocket expenses during lawsuits.
- Legal Support – Access to expert legal teams for defense.
- Client Trust – Increases credibility and professionalism.
- Contract Compliance – Many clients require proof of liability insurance before hiring.
- Peace of Mind – Focus on your work without worrying about potential lawsuits.
Average Cost of Professional Liability Insurance
The cost of professional liability insurance depends on several factors:
- Type of profession (lawyer, doctor, consultant, etc.)
- Business size and annual revenue
- Number of employees
- Coverage limits ($1 million – $5 million)
- Claims history
On average:
- Small businesses and freelancers: $500 – $1,500 per year
- Medical and legal professionals: $2,000 – $5,000 annually
- High-risk industries: May exceed $10,000 per year
Comparing professional liability insurance quotes from multiple providers can help lower costs.
Best Professional Liability Insurance Companies in 2025
Here are some of the top insurers for professional liability insurance coverage:
- The Hartford – Affordable policies for small businesses and consultants.
- Nationwide – Strong general and professional liability bundles.
- Chubb Insurance – Best for large businesses and high-value professionals.
- Travelers Insurance – Great for customizable coverage, including tech professionals.
- Hiscox Insurance – Known for small business liability insurance and freelancers.
- AIG (American International Group) – Offers specialized E&O policies for global firms.
- CNA Insurance – Focused on healthcare and legal professional coverage.
How to Get Professional Liability Insurance
Follow these steps to secure the best professional liability insurance policy:
- Assess Your Risks – Understand the potential claims in your profession.
- Decide on Coverage Limits – Choose limits that match your business exposure.
- Request Multiple Quotes – Compare E&O insurance quotes from top providers.
- Bundle Policies – Combine with general liability or cyber liability for savings.
- Review Policy Exclusions – Ensure your plan covers all possible risks.
FAQs About Professional Liability Insurance
Q1: Is professional liability insurance mandatory?
Not always, but many industries and contracts require it.
Q2: What’s the difference between professional liability and general liability insurance?
General liability covers physical injuries or property damage, while professional liability covers financial losses due to mistakes or negligence.
Q3: Do freelancers need professional liability insurance?
Yes, freelancers can be sued for project errors or missed deadlines.
Q4: How much coverage should I buy?
Most professionals choose $1 million – $2 million in coverage, but high-risk industries may need more.
Q5: Can I get a monthly payment option?
Yes, many insurers allow monthly installments instead of annual payments.
Final Thoughts
In today’s competitive world, even small mistakes can lead to costly lawsuits. Having professional liability insurance ensures that you and your business are protected from claims of negligence, errors, or failure to deliver promised services.
Top insurers like The Hartford, Chubb, Travelers, Hiscox, and Nationwide provide tailored E&O insurance policies for professionals across industries. By comparing professional liability insurance quotes, you can find affordable coverage that matches your risk level.
Protect your career, finances, and reputation with the right professional liability insurance coverage—because one lawsuit can cost more than years of premiums.