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What is professional liability insurance?


​What the insurance industry refers to as professional liability insurance, you are probably more familiar with as malpractice insurance. Other professions may refer to it as errors & omissions insurance.

Professional liability insurance helps protect you from lawsuits alleging that an error committed in the performance of your professional services resulted in some form of damages. While malpractice claims typically involve a physical injury, they can also include violating a patient’s rights, verbal abuse, or unprofessional conduct.

Many licensed healthcare professionals, including physicians, nurses, physical therapists, pharmacists and counselors carry professional liability insurance to protect their careers, reputations, and finances from potential malpractice allegations.  

Outside of the healthcare industry, licensed professionals such as lawyers, accountants, and insurance agents also carry professional liability insurance. One key difference being, the errors committed in the performance of their professional services typically result in financial injury, rather than physical injury.

What are the dollar limits of my coverage?

Your professional liability insurance provides you with $1 million of coverage for lawsuits alleging malpractice. The $3 million ‘aggregate’ limit you see on your certificate of insurance means it will pay up to $1 million per claim, not to exceed $3 million in claims per year.

In addition to payouts for malpractice settlements and judgements, your coverage pays for your legal defense. With medical malpractice lawsuits taking an average of 28 months to resolve—the cost for legal expenses can at times outweigh the cost for the malpractice judgment.1

How much do medical malpractice claims cost?

The cost varies by profession, the location where you practice, the age of the injured party, and several other factors.  Here is some average malpractice claim costs by profession:2
$124,407 Pharmacists
$113,642 Counselors
  $96,598 Physical Therapists
  $45,192 Occupational Therapists

Most malpractice claims are settled out of court. For claims that go to trial, our insurer CNA wins more than 80% of its cases.3  

If you are involved in a case that is won at trial, there are still legal expenses. The figures above do not reflect the legal expense to defend the claim. Again, costs can vary by profession, but the average cost to defend a medical malpractice lawsuit is $30,000.4 

That is one of the primary dangers of going without coverage. You may think you never make mistakes, yet you could still become the target of a lawsuit. You could be deemed not guilty, yet you could still be on the hook for thousands of dollars in legal fees.

What other types of claims does professional liability pay?
Your professional liability insurance includes multiple extensions of coverage that pay for expenses such as the cost to hire an attorney for a deposition, defendant expenses like lodging and travel, and fines associated with HIPAA privacy violations.  

The most commonly used coverage extension is License Protection.

Though healthcare professionals typically buy professional liability for the malpractice coverage, there are as many as twenty times more complaints filed with state licensing boards than there are malpractice claims every year.4  

Your policy includes $25,000 of license protection coverage that allows you to hire an attorney to help you craft a written response to your state board and will accompany you to any hearings. Having an attorney at your side can be the difference between losing and keeping your professional license.  

Other professional liability coverage extensions include:
  • $25,000 Sexual Misconduct/Abuse 
  • $25,000 Information Privacy (HIPAA) Fines and Penalties
  • $25,000 Defendant Expense Benefits
  • $25,000 Workplace Violence
  • $10,000 Deposition Representation
Is there anything else I need to know about my coverage?
To get in touch with us for further information, to report a claim, or to discuss an incident that may result in a claim, please call 1-800-982-9491. Our team of experts are available to assist you Monday through Friday between 8:00am and 6:00pm EST. 

This publication is intended to inform Affinity Insurance Services, Inc., customers of potential liability in their practice. This information is provided for general informational purposes only and is not intended to provide individualized guidance. All descriptions, summaries or highlights of coverage are for general informational purposes only and do not amend, alter or modify the actual terms or conditions of any insurance policy. Coverage is governed only by the terms and conditions of the relevant policy. This information is not intended to offer legal advice or to establish appropriate or acceptable standards of professional conduct. Readers should consult with a lawyer if they have specific concerns. Neither Affinity Insurance Services, Inc., HPSO, nor CNA assumes any liability for how this information is applied in practice or for the accuracy of this information. 

Healthcare Providers Service Organization is a registered trade name of Affinity Insurance Services, Inc., a licensed producer in all states (TX 13695); (AR 100106022); in CA, MN, AIS Affinity Insurance Agency, Inc. (CA 0795465); in OK, AIS Affinity Insurance Services, Inc.; in CA, Aon Affinity Insurance Services, Inc., (CA 0G94493), Aon Direct Insurance Administrators and Berkely Insurance Agency and in NY, AIS Affinity Insurance Agency.​

1”What is the average value of a medical malpractice injury?” Miller & Zois, 2020.
2Average malpractice claim costs found in HPSO’s claim reports.  See the Risk Education section on hpso.com for the complete reports.
3CNA November 2013.
4Brandon Rich, “What does it cost to defend a malpractice claim?” Gallagher, February 26, 2016.