Home » What Does Professional Liability Insurance Cover?
October 4, 2023
Clearwater Partners

What Does Professional Liability Insurance Cover?

Professional liability insurance, often referred to as errors and omissions insurance, is a critical component of risk management for individuals and businesses that provide professional services. This type of insurance is designed to protect professionals from financial losses resulting from claims of negligence, errors or omissions in the course of their work.

Although the exact details, capabilities and limitations of a professional liability insurance policy may vary, policyholders can typically retain coverage for the following:

  • Third-party losses—Professional liability insurance primarily covers claims arising from mistakes, errors or negligence in the services provided by a professional. This can include various professions, such as lawyers, doctors, architects, consultants and even technology companies. If a client alleges that a professional’s advice or service caused them financial harm, this insurance can help cover resulting losses.
  • Legal defense costs—One key aspect of professional liability insurance is that it covers legal defense costs. Legal battles can be expensive, and even if a claim is ultimately dismissed, the legal fees can be a significant financial burden. Professional liability insurance can help cover the costs of hiring a lawyer, court fees, and other legal expenses incurred in defending the professional against the claim.
  • Settlements and damages—In cases where the professional is found liable for a client’s financial losses due to their errors or omissions, the insurance policy will cover the damages awarded to the client. This helps protect the professional’s assets and ensures they can continue their practice without suffering crippling financial consequences.

In addition to helping to pay for the aforementioned expenses and losses arising from allegations of professional errors, this type of insurance may also include additional financial protections and features, such as the following:

  • Protection for personal assets—One of the significant advantages of professional liability insurance is that it separates personal assets from business liabilities. This means that even if a claim exhausts the policy limits, the professional’s personal assets, such as their home and savings, are shielded from being used to satisfy the claim.
  • Coverage extensions—Professional liability insurance can also offer additional coverage extensions depending on the policy. These may include coverage for cyber liability, defamation claims and even protection against claims made by employees or subcontractors. The specific extensions vary by policy and profession, so it’s crucial to tailor the coverage to the unique risks of your business or practice.
  • Peace of mind—Perhaps one of the most valuable aspects of professional liability insurance is the peace of mind it provides. Knowing the right insurance is in place to mitigate the financial risks associated with professional errors can reduce stress and allow professionals to focus on their work without constantly worrying about the possibility of a lawsuit. Furthermore, clients and customers may be more confident in enlisting the services of adequately insured professionals.

Get the Right Coverage

At Clearwater Partners, our team of knowledgeable professionals is well-equipped to help businesses in the Tampa, Florida, area assess and address their professional liability insurance needs. Contact us today to get started.


This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.

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