Jun 10, 2025
Maybe you’ve started that business you’ve been dreaming about, or maybe you’ve had your ideal job for a while. Either way, you just haven’t gotten around to purchasing liability insurance yet. So, is it ever too late to buy professional liability insurance? The answer is pretty simple: yes.
The minute you make a mistake — or get accused of making one — it’s too late to buy a liability policy. Liability insurance helps protect you if you get allegations of mistakes or negligence in your professional career, just like homeowner’s insurance helps protect you in the event property damage to your house. Think of it as “worst-case scenario insurance”! And we all know you can’t buy homeowners insurance after your basement floods.
The following article explains why, when, and how you should get professional liability insurance, along with what to look for when you buy a policy. Whether you’re in healthcare looking for medical malpractice insurance or running your own finance, technology, or marketing business and looking for errors and omissions insurance, this article is for you.
Professional liability insurance, also known as errors and omissions (E&O) insurance, or malpractice insurance in healthcare fields, is designed to protect professionals against claims of negligence, mistakes, or failure to perform professional duties. Unlike general liability insurance, which covers third-party bodily injury and property damage claims, professional liability insurance addresses harm your professional services may have caused.
For example, if a client trips and falls in your office, general liability would help cover their medical bills. But if a client loses money because of advice you provided or a service/procedure you performed incorrectly, that’s where professional liability insurance steps in.
Professional liability policies typically cover:
Anyone who provides professional services or advice should strongly consider buying a professional liability policy. When clients believe your work caused them financial harm, they may file a lawsuit against you — regardless of whether you made a mistake or they only think you made one. Many professionals choose to buy this type of insurance with the mindset of “I hope I don’t make a mistake that hurts someone else, but if I do, I don’t want it to wreck me or my business financially.”
The monetary protection professional liability insurance offers extends beyond just covering legal settlements. It typically pays for:
In nonmonetary terms, professional liability insurance also allows you to practice your profession with confidence, knowing that one mistake or misunderstanding won’t end your career or empty your bank account.
If you have clients or patients, you probably need professional liability insurance to protect yourself from claims against errors, negligence, or even bad advice. Making mistakes is human, but you don’t want a single mistake to ruin your reputation or siphon your savings.
Healthcare professionals need medical malpractice insurance, which is a specific type of professional liability insurance that protects against claims of deviating from the standard of care leading to patient bodily harm. This includes doctors, dentists, nurses, therapists, and other allied health professionals.
Outside of healthcare, professionals who commonly need E&O insurance include:
Furthermore, while independent contractors working in a range of fields enjoy a high degree of freedom, that autonomy can leave them exposed to claims from unhappy clients. Without proper insurance, their personal assets could be at risk.
Even if you work for a company that carries a professional liability policy, you might still need individual coverage. Employer policies primarily protect the business and may not provide adequate coverage for individual employees. This may be especially true when multiple professionals are named in one lawsuit or complaints are made to a licensing board.
Remember: the question isn’t whether you’ll make a mistake — it’s whether you can afford the consequences if someone alleges you made one.
The best time to buy professional liability insurance is before you start offering professional services. Most insurance experts recommend obtaining coverage before you see your first client or patient, not after you’re already established.
That’s because most professional liability insurance typically works as a “claims-made” policy, meaning it only covers claims that occur and are reported while your policy is active. If someone files a claim against you for work you did before you had insurance, your policy won’t likely cover that claim.
Some important timing considerations include:
Some insurers offer “tail” coverage that can extend your existing policy’s coverage period, but these options can be typically more expensive and may have limitations. The simplest approach is to get coverage before you begin offering services.
Remember: insurance companies won’t sell you a policy to cover a claim that has already been filed against you or for an incident that has already occurred — that’s like trying to buy homeowner’s insurance while your house is on fire.
Professional liability insurance policies generally range from a few hundred to several thousand dollars annually. Higher-risk professions like healthcare typically cost more than lower-risk professions like consulting or design. For example:
Factors that influence your premium include:
Finding the right professional liability policy requires careful consideration. Here are five essential tips to guide your purchase:
A claims-made policy covers you only if both the incident and claim filing happen while your policy is active. An occurrence policy covers any incident that happens during the coverage period, regardless of when the claim is filed. Most professional liability policies are claims-made, which means you need continuous coverage to stay protected.
Look for companies with strong financial ratings (A++ from AM Best is ideal) to ensure they’ll have the resources to pay future claims. An insurer’s ability to fulfill its obligations is critical when you’re facing a lawsuit.
Policy limits determine the maximum amount your insurer will pay for a claim. Higher limits provide more protection but increase your premium. Similarly, higher deductibles lower your premium but increase your out-of-pocket costs in the event of a claim.
These clauses prevent your insurer from settling a claim without your approval. This is important because settlements may impact your professional reputation, and you might prefer to defend against claims you believe are unfounded.
Every policy has exclusions — situations or actions not covered by the policy. Common exclusions include fraudulent acts, criminal activity, and claims arising from services outside your professional scope. Be sure you understand what your policy doesn’t cover.
When selecting a professional liability policy, certain features indicate quality coverage:
You may want to look for:
You may want to avoid:
Remember to verify that the policy covers the specific services you provide. Some professionals require specialized coverage — for example, technology consultants might need cyber liability protection, while healthcare providers might need HIPAA violation defense.
It’s too late to buy professional liability insurance after you’ve been notified of a claim or become aware of a potential one. Insurance policies contain “prior knowledge” exclusions, meaning they won’t cover incidents you knew about before purchasing coverage.
Here are specific scenarios when it’s too late to get coverage:
Additionally, waiting to buy insurance can have other disadvantages:
Insurance companies typically offer the most favorable rates to professionals with clean claims histories. Once you’ve had a claim filed against you, your future premiums will likely be higher — assuming you can find coverage at all. The best approach is to secure coverage before you need it, not when you realize you need it.
Berxi makes buying professional liability insurance straightforward and affordable. As a direct-to-consumer insurance provider, Berxi eliminates broker fees, potentially saving you an average of 15% or more compared to other insurers.
Berxi’s professional liability policies include key features professionals need:
Backed by Berkshire Hathaway Specialty Insurance, Berxi provides the financial stability professionals need with A++ ratings from AM Best and AA+ from Standard & Poor’s.
Getting a quote takes minutes and our product specialists are available to answer any questions about coverage options for your specific profession.
Don’t wait until it’s too late — get the professional liability coverage you need today.
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The views expressed in this article are those of the author and do not necessarily reflect those of Berxi™ or Berkshire Hathaway Specialty Insurance Company. This article (subject to change without notice) is for informational purposes only, and does not constitute professional advice. Click here to read our full disclaimer
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Ryan Craggs is a content strategist and journalist with more than a decade of marketing and editorial experience. He helps travel, finance, and tech clients craft compelling narratives that captivate audiences. For more, go to RyanCraggs.com
Berxi Editorial Team Mar 25, 2025
Amy Beardsley Mar 25, 2025
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