Who needs professional liability insurance?

By Higginbotham on October 19 , 2017

Photo by Chris Davis on Unsplash

With so many insurance products available, figuring out which ones we need can seem daunting. No one wants to waste money on a superfluous policy. At the same time, no one wants to go without an essential policy – then pay the price for it later. One policy you may be wondering about is professional liability insurance.

What is Professional Liability Insurance?

Professional liability insurance is also known as professional indemnity insurance or errors & omissions insurance. It protects individuals who provide professional services. If a client sues the professional over allegations that faulty services or advice resulted in financial loss, the policy could cover the resulting legal costs and settlements, up to the policy limit.

A professional liability policy may provide protection against lawsuits alleging financial loss resulting from incomplete work, substandard work, an error or an omission.


  • An architect creates a defective building design that results in a partial collapse.
  • A CPA incorrectly prepares a client’s tax return and the client is hit with fines and penalties.
  • An IT professional leaves a client’s system vulnerable resulting in a data breach.

How is Professional Liability Different Than General Liability?

Professional liability and general liability are meant to cover different exposures. Most professional liability policies cover financial losses suffered by third parties as opposed to bodily injury and property damage, which are typically covered under commercial general liability policies.

For example, general liability may provide coverage in the event a customer sues you after slipping and falling on your commercial property. Whereas if you’re sued for an alleged professional mistake that causes a third party financial loss, professional liability could provide coverage.

Who Needs Professional Liability Insurance?

Professional liability coverage is appropriate for professionals working in a wide range of industries. As a rule of thumb, any professional who offers services and advice to clients may benefit from this coverage. Otherwise, a single mistake – or even the allegation of a perceived mistake – can result in devastating legal expenses.

Professionals who may benefit from a professional liability policy include:

  • Accountants and financial advisors
  • Advertising and creative agencies
  • Architects, engineers and design professionals
  • Real estate agents
  • Bankers and investment professionals
  • Insurance agents
  • Information technology professionals

Other professionals may also benefit from this protection. If you provide advice or professional services, ask your Higginbotham agent if you should have professional liability insurance.


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Tags: Business Insurance


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