In some cases, a contract, professional affiliation, or state law may require businesses to carry professional liability coverage. But even if it’s not required, professional liability insurance shows prospective clients that you are a legitimate business worthy of their trust.
What is professional liability insurance?
Professional liability insurance covers mistakes in your work.
Also known as errors & omissions insurance, E&O, or professional indemnity insurance, this is protection for claims that you have failed to provide your services appropriately, causing monetary or reputational damage.
Mistakes happen. But the kind of mistakes that lose your customers money can lead to expensive legal fees, court dates, and long claims processes, and all of those things get in the way of you building your business. Let’s go over the basics of this small business essential.
What does professional liability insurance cover?
While general liability insurance covers you in the event of third-party bodily injury or property damage, professional liability insurance protects you providing or failing to provide professional services resulting in financial loss. Your policy can provide coverage for these key things:
Actual or Alleged Negligence
The insurer does the legwork in determining what happened when a customer claims that you (or members of your crew) were negligent in completing your work, such as missing a deadline or not acting professionally.
Defense of Claims
The insurer defends you in legal proceedings related to claims that you didn’t follow through on a portion of your deliverable or service, be it the word count on an article or the file format of a wedding video.
False or Frivolous Claims for Damages
Along with helping to cover the costs of valid claims, the policy will defend you against claims that ultimately have no merit.
Why is professional liability important?
How much does professional liability insurance cost?
On average, small business owners typically pay around $45 per month or $500 per year for professional liability insurance.¹
The cost of professional liability insurance will vary based on a few factors—mainly what you do and where you work. Your industry determines how much you’re exposed to risk, as some jobs come with a higher likelihood of professional liability. As with any insurance policy, the cost varies based on your specific business’s details, but policies arranged by Thimble start at $36 per month.
What other kinds of business insurance do I need?
While professional liability insurance is designed to protect your business from risks associated with negligence, the total picture of protecting your assets includes a few other essential types of insurance.
General Liability Insurance
Protects your business against claims of third-party bodily injury, property damage, and personal and advertising injury.
Protects your business if you have employees or workers of any kind. This coverage applies to medical expenses and lost wages associated with work-related injuries and illnesses.
Business Equipment Protection
Protects the equipment you own and use for work, from a lawn mower to a camera. Also known as inland marine insurance, this is a type of property insurance that covers your stuff.
Professional Liability Insurance FAQs
Is professional liability insurance required by law?
Professional liability insurance is legally required for some professions and roles, specifically in the medical and legal industries. However, even if it’s not legally required, your clients may contractually require you to have a professional liability insurance policy. Make sure you understand the terms of your contract.
Professions required to carry professional liability insurance:
- Medical professionals must carry medical malpractice insurance, an industry-specific type of professional liability coverage. This applies to doctors, nurses, rehabilitation professionals, physician’s assistants, and other employees in allied health care settings
- Lawyers are often required to carry professional liability coverage, or at least inform their clients if they are practicing without insurance.
- Government contractors may be required to carry professional liability insurance.
- Some professionals are required to carry professional liability insurance in order to be licensed or to perform certain functions in certain jurisdictions.
Is professional liability the same thing as general liability insurance?
No; professional liability insurance and general liability insurance are described as “Interlocking coverages” because they each protect a different area of the most essential risks to a small business, which is why Thimble often bundles them together.
Where is professional liability insurance available with Thimble?
Professional liability insurance is currently available with Thimble in almost all states except for Washington and New York. Stay tuned for those two states—we’re working on launching professional liability insurance for you soon!
Can I get my professional liability and general liability insurance under one policy?
Yes! Policies with Thimble include both general liability and professional liability coverage in one simple, affordable package to give you a wider safety net when working with clients.
How do I show proof I have a professional liability insurance policy?
After you purchase a policy, you’ll receive an email with your policy details and any necessary Certificates of Insurance (COI) you might require. Your COI, also referred to as an ACORD 25, Certificate of Liability Insurance, is a standard document that proves your business is insured. A COI includes details like the types of liability coverage (general liability, professional liability, etc.) you have in force, the applicable policy limits, and the duration of your policy. This is typically the document you need to show your clients to prove that you’re ready to get to work. With Thimble, you’ve got instant access to your COI after purchase and can make and send unlimited copies all with a click of a button.
How do I file a professional liability claim?
If you need to file a claim, please follow the contact instructions listed on your policy. Read more here.
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Fast & Easy
This is fast and easy and works great for me! I am a one man freelance landscaper and this gives me the ability to purchase insurance directly from my phone anytime and anywhere I need it.
Super easy to use! Though of everything
This app is beautiful and super easy to use! It’s super easy to get insurance for the weddings I shoot where the venues require insurance. I can just buy it on the app with 3 clicks and I’m done.
I love this idea ????!! I needed to have proof of liability to present my proposal; got it on the spot. I didn't win the bid but I didn't get stuck with costly insurance, either!!
Best insurance solution for small businesses.
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It was so easy, quick, and simple. The PDF package I received contained everything I needed. This was the best experience I've ever had obtaining insurance...thank you!!!
I was very impressed with your monthly rate on general liability coverage! Much less than 1/12 of everyone else's annual rate.