Unlike general liability insurance, which is for most general businesses, professional liability insurance is slightly more specific. 

Where general liability covers non-professional negligence, professional liability insurance covers professional negligence. This means that it covers mistakes made by an individual offering a specialized or professional service that causes a client to lose money. 

Essentially any individual or business that offers specialized service should carry professional liability insurance. Anyone who is in a position to cost their clients money due to their professional service is liable to professional liability claims. This includes: 

For example, say you are an accountant and make a clerical error that causes your client to lose thousands of dollars. The client then decides to sue for their losses. Professional liability insurance can cover expenses related to this incident and lawsuit. 

Depending on your industry, professional liability insurance may be known by a different name. Its common names include Errors and Omissions insurance and medical malpractice insurance. In medicine, medical malpractice can cover expenses related to surgical mistakes, failure to diagnose, failure to follow up, improper medication, premature discharge, unnecessary surgery, misreading or ignoring lab results and more.  

An example would be that if a patient has surgery and a doctor fails to follow up. A lack of aftercare or following up leads to an infection in the surgery area, which costs the patient pain, time and money for having another procedure done to fix the new issue. In this case, professional liability insurance can help pay for the patient’s extra expenses as well as protect the doctor and hospital against a lawsuit. 

When Do You Need Professional Liability Insurance? 

It is important to purchase professional liability insurance before ever beginning operations as a business, professional or specialist. If you believe you are offering a specialized service, speak with an insurance agent about possibly purchasing a professional liability insurance policy. 

What Does Professional Liability Insurance Cover? 

A professional liability insurance policy can cover many expenses related to a professional negligence claim, including compensation to victims of professional negligence and legal fees the business or individual may face. If you or your business is sued due to professional negligence, professional liability insurance can cover court fees, defense costs, settlement expenses and more. 

Discuss with an insurance agent how much insurance you or your business needs. Every profession is different, so make sure you get the proper amount of coverage in order to operate safely.