Professional Liability Insurance for New York Businesses
Why Professional Liability Coverage Matters
Even the most careful professionals make mistakes. A single allegation of negligence—whether justified or not—can cost tens of thousands in legal defense alone. Professional liability insurance protects your business, reputation, and personal assets when clients claim your services caused them financial harm.
Protect Your Professional Practice Today
Coverage tailored to your specific profession and risk profile.
As a professional service provider in New York, your expertise is your livelihood. But even the most skilled professionals can face allegations of negligence, errors, or failure to deliver promised results. One unhappy client, one missed deadline, one piece of advice that didn't work out—and suddenly you're facing a lawsuit that could threaten everything you've built.
Professional liability insurance (also called Errors & Omissions or E&O insurance) provides the financial protection you need when clients claim your professional services caused them harm. The Stan Steele Agency helps New York professionals find the right coverage for their unique risks and budget.
What Is Professional Liability Insurance?
Professional liability insurance is specialized coverage that protects businesses and individuals who provide professional services or advice against claims alleging negligence, errors, omissions, or failure to perform their professional duties.
Unlike general liability insurance, which covers bodily injury and property damage, professional liability specifically addresses financial losses that clients claim resulted from your professional work. This includes allegations of:
- •Negligence: Failure to exercise reasonable care and skill
- •Errors: Mistakes in your work product or advice
- •Omissions: Failure to include something or take action
- •Misrepresentation: Inaccurate statements about your services
- •Breach of duty: Violating your professional obligations
The coverage pays for legal defense costs, court fees, and settlements or judgments—expenses that can easily reach six figures even for frivolous claims.
Also Known As:
- Errors & Omissions (E&O)
- Malpractice Insurance
- Professional Indemnity
- E&O Liability
Key Difference: General liability covers physical harm; professional liability covers financial harm from your services.
Who Needs Professional Liability Insurance?
Any business or individual who provides professional services, advice, or expertise to clients should carry professional liability insurance. If clients rely on your knowledge, skills, or recommendations to make decisions, you face E&O exposure.
Business & Financial Services
- • Accountants & CPAs
- • Bookkeepers
- • Financial advisors
- • Tax preparers
- • Business consultants
- • Management consultants
Technology Professionals
- • IT consultants
- • Software developers
- • Web designers/developers
- • Cybersecurity professionals
- • Data analysts
- • Technology integrators
Real Estate & Insurance
- • Real estate agents/brokers
- • Property managers
- • Appraisers
- • Insurance agents/brokers
- • Mortgage brokers
- • Title agents
Design & Creative Services
- • Architects
- • Engineers
- • Interior designers
- • Graphic designers
- • Marketing agencies
- • Advertising firms
Healthcare & Wellness
- • Physicians & surgeons
- • Dentists
- • Chiropractors
- • Mental health counselors
- • Physical therapists
- • Nutritionists/dietitians
Legal & Advisory
- • Attorneys
- • Paralegals
- • Notaries
- • HR consultants
- • Executive coaches
- • Career counselors
Important: Many contracts and professional associations require E&O coverage. Even if not legally mandated, clients increasingly expect professionals to carry this protection before signing agreements.
What Professional Liability Insurance Covers
Typically Covered
- Legal defense costs
Attorney fees, court costs, and expert witnesses—even for groundless claims
- Settlements and judgments
Amounts you're legally obligated to pay for covered claims
- Negligence claims
Allegations you failed to meet professional standards
- Errors and mistakes
Unintentional errors in your professional work
- Omissions
Failure to include information or perform services
- Misrepresentation
Inaccurate statements about services or qualifications
Common Exclusions
- Intentional wrongdoing
Deliberate fraud, criminal acts, or dishonesty
- Bodily injury & property damage
These require general liability insurance instead
- Prior known claims
Incidents you knew about before buying the policy
- Contractual guarantees
Promises beyond standard professional duties
- Employment disputes
Claims from employees (requires EPLI coverage)
- Intellectual property infringement
Copyright, patent, or trademark violations (often excluded)
Understanding Claims-Made vs. Occurrence Policies
Most professional liability policies are "claims-made," which works differently than the "occurrence" policies common in other insurance types. Understanding this distinction is crucial:
Claims-Made Policy
Covers claims filed during the policy period, regardless of when the incident occurred (as long as it's after the "retroactive date").
Example:
You provided consulting services in 2022. A client sues you in 2024 claiming negligence. If your 2024 policy has a retroactive date of 2021 or earlier, the claim is covered.
Key Consideration: You need continuous coverage and possibly "tail coverage" when retiring or changing carriers.
Occurrence Policy
Covers incidents that happen during the policy period, regardless of when the claim is filed.
Example:
An incident occurs in 2022 while you have coverage. A claim is filed in 2024, even if you no longer have insurance. The 2022 policy still covers it.
Key Consideration: More expensive but provides lasting protection for past work.
Important: Tail Coverage (Extended Reporting Period)
When you retire, sell your business, or switch to a new insurer without continuous "prior acts" coverage, you may need "tail coverage" to protect against claims arising from past work. This can typically be purchased for 1-5 years or even unlimited periods. Plan ahead—tail coverage is expensive but essential.
How Much Does Professional Liability Insurance Cost?
Professional liability insurance costs vary widely based on your profession, coverage needs, and risk factors. Here's what influences your premium:
Typical Cost Ranges:
Factors Affecting Your Premium
- •Profession type: Higher-risk professions pay more
- •Annual revenue: Larger operations face greater exposure
- •Coverage limits: Higher limits cost more
- •Deductible amount: Higher deductibles lower premiums
- •Claims history: Past claims increase costs
- •Years in business: Newer businesses may pay more
- •Client types: Serving larger clients increases risk
- •Geographic area: Some regions are more litigious
Ways to Save on Professional Liability Insurance:
- ✓ Choose appropriate coverage limits (not too much or too little)
- ✓ Opt for a higher deductible if you can afford it
- ✓ Maintain a clean claims history with risk management practices
- ✓ Bundle with other business insurance policies
- ✓ Complete risk management or continuing education programs
- ✓ Work with an independent agent who can compare carriers
Get a Professional Liability Quote in Minutes
We work with multiple carriers to find competitive E&O coverage for your profession. No obligation, free consultation.
Real-World Professional Liability Claims
Professional liability claims can arise from seemingly minor oversights. Here are examples of how E&O coverage protects different professionals:
Accountant Misses Tax Deadline
A CPA fails to file a client's tax return on time, resulting in IRS penalties and interest. The client sues for the additional costs plus damages for the stress and time spent resolving the issue. E&O insurance covers the defense costs and settlement.
IT Consultant's Software Error
A technology consultant implements software that corrupts a client's database, causing business interruption. The client claims negligence in testing and implementation. Defense costs alone exceed $50,000 before the case even goes to trial.
Real Estate Agent Disclosure Failure
A real estate agent fails to disclose known foundation issues on a property. The buyer discovers the problem after closing and sues for repair costs and diminished property value. E&O coverage pays for legal defense and negotiated settlement.
Marketing Agency Misses Deadline
A marketing firm fails to launch a client's campaign on schedule for a major product release. The client claims lost sales and market opportunity worth hundreds of thousands. Even if the claim is exaggerated, defense costs are substantial.
How to Choose the Right Coverage
Key Questions to Consider:
What are your contract requirements?
Many clients require specific coverage limits. Review your contracts before choosing limits.
What's your largest single project?
Your coverage limits should at least match the value of your largest engagement.
How litigious are your clients?
Serving large corporations or government entities may require higher limits.
What deductible can you afford?
Balance lower premiums against your ability to pay out-of-pocket.
Common Coverage Limits
Limits shown as Per Claim / Aggregate. Deductibles typically range from $1,000 to $25,000.
Frequently Asked Questions
What is professional liability insurance?
Professional liability insurance, also called Errors and Omissions (E&O) insurance, protects businesses and individuals who provide professional services against claims of negligence, mistakes, or failure to perform. It covers legal defense costs and settlements if a client claims your work caused them financial harm.
Who needs professional liability insurance?
Any business or individual providing professional services or advice should consider E&O insurance. This includes consultants, accountants, IT professionals, real estate agents, insurance agents, architects, engineers, lawyers, healthcare providers, and many other service-based professionals.
How much does professional liability insurance cost?
Professional liability insurance typically costs between $500 and $5,000+ per year, depending on your profession, coverage limits, claims history, and business size. High-risk professions like medical practitioners or attorneys may pay significantly more due to increased exposure.
What's the difference between claims-made and occurrence policies?
Claims-made policies cover claims filed during the policy period, regardless of when the incident occurred (as long as it's after the retroactive date). Occurrence policies cover incidents that happen during the policy period, regardless of when the claim is filed. Most professional liability policies are claims-made.
Does general liability insurance cover professional mistakes?
No, general liability insurance does not cover professional errors, negligence, or mistakes in your work. General liability covers bodily injury and property damage, while professional liability specifically covers financial losses your clients suffer due to your professional services or advice.
What is tail coverage in professional liability insurance?
Tail coverage, or an Extended Reporting Period (ERP), allows you to report claims after a claims-made policy ends. This is crucial when retiring, changing careers, or switching insurers because professional liability claims can arise years after the work was performed.
Related Business Coverage
Professional liability is one component of comprehensive business protection. Consider these complementary coverages:
General Liability
Covers bodily injury and property damage claims that E&O doesn't address.
Cyber Liability
Essential for professionals handling client data and digital information.
Directors & Officers
Protects business leaders from personal liability for company decisions.
Employment Practices
Covers claims from employees alleging discrimination, harassment, or wrongful termination.
Important Information
This information is provided for educational purposes only and does not constitute legal or insurance advice. Coverage features, exclusions, and availability vary by state, carrier, and individual circumstances.
All coverage is subject to policy terms, conditions, and exclusions. Please review your policy carefully and consult with a licensed insurance professional to determine appropriate coverage for your specific situation.
The Stan Steele Agency is licensed to conduct business in New York State. License information available upon request.
Protect Your Professional Practice Today
Don't let one client dispute jeopardize your career and livelihood. Get the professional liability coverage you need with expert guidance from Stan Steele Agency.
Why Work With Us:
- ✓ Free, no-obligation quotes
- ✓ Multiple carriers for competitive rates
- ✓ Industry-specific expertise
- ✓ Help understanding claims-made policies
- ✓ Tail coverage guidance when you need it
Serving NY professionals since 1969 • Expert E&O guidance
