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What it covers
- Negligence or mistakes in your services
- Errors and omissions in work or advice
- Missed deadlines that cost a client money
- Misrepresentation claims
- Legal defense costs, even if the claim is groundless
Example: a marketing consultant’s campaign data error causes a client to lose sales, and the client sues. Professional liability pays for the defense and any settlement up to the limit.
What it doesn’t cover
- Bodily injury and property damage – see general liability
- Employee injuries – see workers’ comp
- Data breaches (unless the policy includes cyber) – see cyber insurance
- Intentional wrongdoing, fraud or criminal acts
Who needs it
| Profession | Why |
|---|---|
| Consultants and coaches | Advice that leads to client losses |
| Accountants and bookkeepers | Errors in filings or records |
| IT, software and web developers | Bugs, outages or failed projects |
| Marketing, design and creative agencies | Missed deadlines, errors, IP disputes |
| Real estate agents and property managers | Disclosure and transaction errors |
| Healthcare and wellness providers | Malpractice (often specialist policies) |
Claims-made policies and tail cover
Most professional liability policies are claims-made: they cover claims made while the policy is active, for work done after the policy’s retroactive date. That has two consequences:
- Keep cover continuous. If you let it lapse and a client sues next year over past work, you may have no cover. When switching insurers, keep the same retroactive date (“prior acts” cover).
- Buy tail cover when you stop. An extended reporting period (tail) lets you report claims for past work after you close, retire or switch to a policy without prior acts cover.
What it costs
Insureon’s small business customers paid a median of $88 a month ($1,056 a year) in 2026. Price depends on your profession, revenue, client contracts, claims history and limits. Online insurers such as NEXT and Hiscox sell standalone policies for consultants and freelancers; see our insurer comparison.
Choosing limits
Start with what your contracts require; many ask for $1 million. Consider the size of projects you take on and the potential financial loss to a client. Higher limits cost more but may be required for larger clients.
Frequently asked questions
What is professional liability insurance?
Insurance that covers claims that your professional services or advice caused a client financial loss, including legal defense. It’s also called errors and omissions (E&O).
How much is professional liability insurance?
A median of $88 a month, or about $1,056 a year, for Insureon’s small business customers in 2026.
What is the difference between E&O and general liability?
E&O covers financial losses from your work or advice; general liability covers physical injuries and property damage.
What is a claims-made policy?
A policy that covers claims made while it’s active, for work done after its retroactive date. Keep it continuous to stay protected.
What is tail coverage?
An extended reporting period that lets you report claims about past work after your claims-made policy ends.
Sources
- U.S. Small Business Administration – Get business insurance
- Insureon – Small business insurance costs (Feb 2026)
- NEXT Insurance – AM Best Superior rating (Sept 2025)
- NerdWallet – Hiscox business insurance review (Feb 2026)
- Fit Small Business – Small business insurance companies (2026)
Insurance prices, discounts and rules change often and vary by state. Figures were checked in October 2026; confirm details with the insurer or your state insurance department.