Professional Liability Insurance

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What is professional liability insurance

What Is Professional Liability Insurance?

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. Professional liability insurance helps cover you and your company if you make a mistake in your professional services. This coverage is also known as errors and omissions insurance (E&O) or in some countries as professional indemnity insurance.

What Does Professional Liability Insurance Cover?

Professional liability insurance helps cover claims of:
  • Negligence
  • Misrepresentation
  • Inaccurate advice
Even if you didn’t do anything wrong, your client can still sue your business if they believe you made a mistake. Without coverage, you’ll have to pay expensive legal defense costs out of pocket.
It’s important to remember that professional liability insurance doesn’t cover everything. For example, it won’t help your business with these kinds of claims:
  • Bodily injury or property damage: You’ll want to get a general liability insurance policy to help cover your costs if someone is injured on your business premises or you damage another's 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: You’ll need cyber insurance if your business loses confidential or sensitive information about your clients and customers.
Professional liability insurance coverage can help your business if:
  • Your accounting firm makes a clerical error that costs your client thousands of dollars.
  • A client sued your florist shop for errors in your services 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 that they couldn't use the property for a business. The new residents decided to file a lawsuit against you for negligence.

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 made against your business during your policy period or within the extended reporting period. And the claim must be from a covered error or omission that happened after your policy’s retroactive date.
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 Needs Professional Liability Insurance?

Many types of businesses need professional liability insurance. Some states require this type of business insurance. In others, business owners choose to get coverage in case a client or customer sues them.
You’ll want to get a professional liability insurance policy if you:
  • Have to sign a contract that requires you to carry coverage
  • Offer professional services directly to customers
  • Regularly give advice to your clients
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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 adding this coverage to their business owner's policy.
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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, health insurance companies, managed care organizations, and hospitals require healthcare professionals to carry general 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 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
Work with our specialists to get the right amount of coverage for your business at the right price. We’re backed by over 200 years of experience and we help protect businesses in many industries with professional liability insurance.
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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. In TX, this insurance is written by Sentinel Insurance Company, Ltd., Hartford Casualty Insurance Company, Hartford Lloyd’s Insurance Company, Property and Casualty Insurance Company of Hartford, Hartford Underwriters Insurance Company, Twin City Fire Insurance Company, Hartford Accident and Indemnity Company and Hartford Fire Insurance Company. In Arizona, New Hampshire, Washington and California, the insurance is underwritten by Hartford Accident and Indemnity Company, Hartford Casualty Insurance Company, Hartford Fire Insurance Company, Hartford Insurance Company of Illinois, Hartford Insurance Company of the Midwest, Hartford Lloyd’s Insurance Company, Hartford Underwriters Insurance Company, Maxum Casualty Insurance Company, Maxum Indemnity Company, Navigators Insurance Company, Navigators Specialty Insurance Company, Pacific Insurance Company, Property and Casualty Insurance Company of Hartford, Sentinel Insurance Company, Ltd., Trumbull Insurance Company and Twin City Fire Insurance Company. The Hartford® is The Hartford Financial Services Group, Inc. and its subsidiaries, including Hartford Fire Insurance Company.
The Hartford® is The Hartford Financial Services Group, Inc. and its property and casualty subsidiaries, including Hartford Fire Insurance Company. Its headquarters is in Hartford, CT.
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