CANADA

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 from 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.

Who needs professional liability insurance?

In a nutshell, professional liability is insurance for pros.

If your clients rely on you for professional consultation, skills, or specific knowledge, from event planning to notarize documents, they can also claim that negligence in those services resulted in a financial loss on their part. For many businesses, professional liability is optional, but some professions in the medical, government, and legal fields require professional liability insurance to secure a license. Other types of businesses that commonly need professional liability coverage include:

Why is professional liability important?

If you provide expert services, professional liability can help protect your assets against claims of negligence or mistakes.

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. 

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. Check prices