Professional Liability Insurance

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What Is Professional Liability Insurance?

Professional liability insurance helps cover you and your company if you make a mistake in the professional services given to a customer or client. This coverage is also known as errors and omissions insurance (E&O). Even if you’re an expert in your business, mistakes happen. And if your client or customer thinks a mistake in your professional services caused a financial loss, they can sue you.

What Does Professional Liability Insurance Cover?

  • Negligence
  • Misrepresentation
  • Inaccurate advice
  • Personal injury, like libel or slander
Even if you didn’t do anything wrong, your client can still sue your business if they believe you’ve made a mistake. Without coverage, you’ll have to pay expensive legal defense costs out of pocket.
Professional liability insurance can help your business if:
  • Your accounting firm makes a clerical error that costs your client thousands of dollars.
  • A client sues your florist shop for errors in the services you provided after you failed to deliver flowers on time for their wedding.
  • Your real estate firm recently sold a townhouse to a couple that was planning on starting a daycare. However, when the couple moved in, the townhouse association informed them they couldn’t use the property for a business. The new owners decide to sue you for negligence.

What Professional Liability Insurance Doesn’t Cover

Professional liability insurance doesn’t cover every kind of claim. It won’t help your business with claims of:
  • Bodily injury or property damage: You’ll want to get a general liability insurance policy to help cover claims that your business hurt somebody or damaged their property.
  • Work-related injuries or illnesses: If your employees get hurt or sick from their job, you’ll need a workers’ compensation insurance policy to help them recover and return to work.
  • Data breach: If your business loses personally identifiable information (PII), data breach insurance can help you respond to the breach. Some insurers call this coverage cyber liability insurance.

How Professional Liability Insurance Works

Many insurance companies write a professional liability insurance policy on a claims-made basis with a retroactive date and extended reporting period.
The retroactive date means you’re covered for incidents that happen on or after a specified date in your policy.
The extended reporting period helps cover claims filed within a certain time after your policy expires. This is generally a 30- to 60-day period, but you can extend this period to a year or more for an additional cost.
Your insurance company only covers claims against your business during your policy period within the extended reporting period. And the claim must be from a covered error or omission that happened after your policy’s retroactive date. It can help cover:
  • Damages
  • Legal defense costs
  • Disciplinary proceedings
  • Loss of earnings
  • Subpoena assistance
Some policies can also be written on an occurrence policy. This means there will be coverage for losses that happen during your policy period, even if the claim gets reported after your policy expires.
Professional Liability claims


Since the claim was reported during the policy period and the loss occurred after the retroactive date, it would be eligible for coverage under a claims-made policy.
If a claim is brought after the policy’s expiration, it can get coverage if it’s reported within the extended reporting period.

Who Should Get a Professional Liability Policy?

You may be wondering who needs professional liability insurance. It’s an important coverage that business owners who provide a service to a client or customer should have. You’ll want to get professional liability insurance coverage if you:
  • Have to sign a contract that requires you to carry coverage
  • Offer professional services directly to customers
  • Regularly give advice to clients
Be aware that some states require this type of business insurance.
Even insurance agents need liability protection, which is why The Hartford offers E&O insurance for insurance agents.
who needs professional liability

Who Needs Professional Liability Insurance?

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Meet Jane, an Interior Designer

For Jane, the best part of being an interior designer is showing off the space she's created. Recently, a client's custom furniture didn't fit and now Jane is being sued. Luckily, Jane is an insured professional and has a Business Owner's Policy with professional liability insurance, which helped pay for her legal fees.
Many small business owners don’t realize the big benefits of professional liability insurance.
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Market Research Firms
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Interior Designers
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Advertising Agencies
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Graphic Designers
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Technology Professionals
IT Professionals are required to carry general liability insurance.
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Healthcare Professionals
States and hospitals require health care professionals to carry professional liability insurance.
How Does It Help?
A professional liability insurance policy helps with common claims like negligence, misrepresentation and inaccurate advice. It will also help cover violations of good faith and fair dealing. If a client sues you, this policy may help pay your legal expenses.
To learn more about professional liability insurance, get a quote from us today.
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How Much Does Professional Liability Insurance Cost?

Your professional liability insurance cost is unique to your business. Factors that can impact your errors and omissions insurance cost include:
  • Policy details, like coverage limits
  • Type of business
  • Location
  • Business size, number of employees and clients
  • Years in business
  • Claims history
When you’re ready to get a professional liability insurance quote, it’s a good idea to have important business documents on hand, such as:
  • Copies of contracts
  • Documentation procedures
  • Any information about previous errors and omissions coverage
  • Quality control processes
  • Employee training initiatives
You can work with our specialists to get the right amount of errors and omissions (E&O) insurance coverage for your business. Backed by more than 200 years of experience, we can help protect with professional liability insurance for small business.
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The Hartford shall not be liable for any damages in connection with the use of any information provided on this page. Please consult with your insurance agent/broker or insurance company to determine specific coverage needs as this information is intended to be educational in nature.
The information contained on this page should not be construed as specific legal, HR, financial, or insurance advice and is not a guarantee of coverage. In the event of a loss or claim, coverage determinations will be subject to the policy language, and any potential claim payment will be determined following a claim investigation.
Certain coverages vary by state and may not be available to all businesses. All Hartford coverages and services described on this page may be offered by one or more of the property and casualty insurance company subsidiaries of The Hartford Financial Services Group, Inc. listed in the Legal Notice.
The Hartford Financial Services Group, Inc., (NYSE: HIG) operates through its subsidiaries under the brand name, The Hartford, and is headquartered in Hartford, CT. For additional details, please read The Hartford’s Legal Notice.
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