What is Professional Liability (Claims Made Professional Liability Form)?
Professional liability insurance, often issued on a "claims made" basis, protects professionals from claims made against them for errors, omissions, or negligence in the course of their work. A "claims made" policy only covers claims filed during the active policy period, regardless of when the incident occurred, as long as it’s after the retroactive date stated in the policy.
This form of insurance is essential for individuals and businesses that provide specialized services or advice, where a mistake could lead to financial loss for their clients.
Who Needs It
Professional liability insurance is important for a wide range of service providers, including:
- Consultants
- Accountants
- Architects and engineers
- IT professionals
- Healthcare professionals
- Lawyers
- Real estate agents
Anyone who provides expert advice or services to clients should consider this coverage to protect against the financial impact of claims alleging mistakes or negligence.
What It Typically Covers
This insurance generally covers:
- Legal defense costs
- Settlements and judgments (up to policy limits)
- Claims of negligence or misrepresentation
- Errors or omissions in professional work
The policy is tailored to the specific risks of the professional’s industry and may be customized to include additional endorsements if needed.
Common Exclusions and Limitations
While professional liability insurance offers important protection, it typically does not cover:
- Intentional or criminal acts
- General liability claims (e.g., bodily injury or property damage)
- Claims made before the retroactive date
- Services rendered outside the scope of the insured’s profession
Always review your policy carefully to understand what is and isn’t covered.
Factors That Influence Cost
The cost of professional liability insurance depends on several factors, including:
- Type of profession and services offered
- Business size and revenue
- Claims history
- Policy limits and deductible
- Location and state regulations
Each policy is customized, so rates can vary widely based on your risk profile and coverage needs.
Proof of Insurance and Compliance
Many clients or state licensing boards may require proof of professional liability insurance before doing business with you. A certificate of insurance (COI) serves as official documentation that you have active coverage. Requirements vary by state and profession, so it’s important to stay informed about any mandates that apply to your work.
How to Get a Quote
Protect your business with the right professional liability coverage. Get a quote today to find the policy that fits your needs.
Frequently Asked Questions
What does "claims made" mean in professional liability insurance?
It means the policy only covers claims made while the policy is active, even if the incident occurred earlier, as long as it’s after the retroactive date.
Is professional liability the same as general liability?
No. General liability covers physical risks like bodily injury, while professional liability covers financial losses due to service-related mistakes or negligence.
Do independent contractors need professional liability insurance?
Yes. Independent professionals who provide services or advice can be held liable for errors, just like companies.
Can I get coverage for past work?
Yes, if your policy includes a retroactive date that predates the work in question. Be sure to discuss this with your insurer.
What happens if I cancel my policy?
If you cancel a claims made policy, you may lose coverage for future claims unless you purchase extended reporting (tail) coverage.
Still have questions? Talk to a local insurance expert.