Professional Liability Insurance: The Backbone for Professionals and Businesses

Professional liability insurance is a policy designed to protect professionals and businesses against financial losses arising from negligence, errors, or mistakes in the delivery of services. The aim of the policy is to safeguard the financial stability and reputation of professionals and businesses. The liabilities covered under professional liability insurance include undelivered services; copyright violation; missed deadlines; negligence or failure to meet standards; breach of contract; defense costs, and errors, inaccuracies, and oversights in services provided.  

On the contrary, business property damage, employee injuries, vehicle business use, customer injuries or damages, and discrimination lawsuits are the liabilities that are not covered in this insurance. Professionals that use this insurance include architects, accountants, doctors, information technology specialists, and consultants who offer expert advice or specialized services to clients. According to Insureon, a part of HUB International, the fifth largest insurance consultant, the cost of professional liability insurance is $735 annually. The prices of maximum policies are between $600 and $1,200 per year.  

Industries that Heavily Rely on Professional Liability Insurance 

Rapid expansion of professional services such as healthcare, engineering, and consulting significantly increases the demand for professional liability insurance. Based on the recent assessment by Allied Market Research, the professional liability insurance market is expected to garner a revenue of $81.2 billion by 2032. The sector accounted for $45.6 billion in 2023 and is estimated to exhibit a CAGR of 6.7% from 2024 to 2032. This revenue growth is further driven by increase in penetration of AI and deepfake technologies have made businesses highly vulnerable to financial fraud, reputational harm, and legal challenges related to privacy and intellectual property, which necessitate professional liability insurance coverage. As a result, industries such as healthcare, consulting & advisory services, technology & software development, legal and financial sectors, and real estate & property management significantly depend on professional liability insurance. 

Research indicates that the medical industry is the leading consumer of professional liability insurance due to alarming increase in the frequency of malpractice claims and the high-risk nature of medical practices. Medical professionals such as doctors, surgeons, nurses, and dentists face significant legal issues due to misdiagnosis, surgical errors, or treatment failures, which make professional liability insurance a necessity. According to the estimates by the National Practitioner Data Bank, which are recorded by the U.S. Department of Health & Human Services, approximately 11,440 medical malpractice claims were reported in 2023. The settlement expenditures reached $4.8 billion, which excluded the verdicts. The study further stated that medical malpractices are the third leading cause of death in the U.S., reaching 250,000 deaths annually.  

Second highest demand for professional liability insurance is witnessed in the legal industry, followed by the technology and software development industry. This is attributed to the fact that lawyers face high risk of claims due to failed attempts to fulfil fiduciary duties and errors in legal representation. Moreover, legal malpractice insurance is mandated by many jurisdictions for practicing attorneys. On the other hand, rapid digitization has increased the risk of IT professionals, cybersecurity firms, and software developers to liability claims due to software failures and data breaches. A study by Statista revealed that around 422.61 million data breaches were recorded in the third quarter of 2024, which resulted in increased claims and higher premiums for liability insurance.  

Driven by high exposure to risks in the healthcare, legal, and technology and software development sectors, they emerge as the leading consumers of professional liability insurance.  

Counterpart Integrates General Liability Coverage 

On October 3, 2024, Counterpart, a leader in professional liability insurtech, partnered with Aspen, a prominent specialty insurer, which has been affirmed the financial strength rating of A. The partnership focuses on adding a new product, general liability insurance, to Counterpart’s miscellaneous professional liability product line. Counterpart now offers small businesses better coverage through its trusted wholesale broker network. This new solution provides customized insurance for small and medium-sized businesses. The general liability insurance offers coverage up to $1M occurrence/$2M aggregate, offering separate limits for both general liability and professional liability. This extra coverage protects small businesses against claims for bodily injury and property damage caused by their services, operations, or products. 

Concluding Note 

Rapid expansion of businesses and professional services like consulting, engineering, and healthcare has considerably boosted the need for professional liability insurance. The healthcare sector dominates the professional liability insurance industry, due to increase in number of medical malpractices and alarming rise in prevalence of surgical errors or treatment failures, which lead to death. Followed by the medical sector, the legal and technology industries are the second and third largest adopters of professional liability insurance to safeguard against claims of negligence, errors, and omissions. 

✍ **𝑨𝒓𝒕𝒊𝒄𝒍𝒆 𝒘𝒓𝒊𝒕𝒆𝒓: Akshata Tiwarkhede 

Akshata Tiwarkhede is an experienced content editor with nearly 10 years in the field. Recently, she has expanded her expertise into business writing, applying her editorial skills to create clear, precise, and professional content. With a keen eye for detail and commitment to quality, she continues to refine and develop content that aligns with industry standards.