Do You Need Professional Liability Insurance? (2025)

Updated: October 6, 2025

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Key Takeaways

Most professionals don't need professional liability insurance by law, but some states require coverage for attorneys, doctors and real estate agents.

Health care professionals, financial advisors, consultants and attorneys benefit most from professional liability coverage due to high lawsuit risk and client expectations.

Consider adding general liability, cyber liability, workers' compensation and tail insurance to protect against coverage gaps professional liability doesn't address.

Do I Need Professional Liability Insurance?

Professional liability insurance is often required when the following circumstances arise:

You are a professional that requires a license to do business
You are an financial or insurance advisor or agent (FINRA requirements)
A client contract requires you to have coverage
You have a commercial lease or lender that requires it as part of their contract
When joining a professional networks coverage may be required

In order to clarify further when you need professional liability insurance, we've broken down common questions asked about this coverage for certain industries and the specifics of requirements.

Do You Need Professional Liability Insurance As a Healthcare Professional?

Most healthcare professionals need professional liability insurance, though requirements vary by state. Some states like Colorado (requiring $1M per incident/$3M annual minimums), Massachusetts, and Connecticut legally mandates malpractice coverage for physicians. Even where not legally required, hospitals typically demand it for admitting privileges. Without coverage, you're personally liable for legal defense and settlements, which can be financially devastating.

Do You Need Professional Liability Insurance As a Legal Professional?

Most attorneys don't face legal requirements for professional liability insurance. Currently, only Oregon and Idaho mandate coverage for private practice lawyers. But many states require disclosure if you don't have insurance, potentially affecting client confidence.

Do You Need Professional Liability Insurance As a Financial Professional?

Professional liability insurance isn't legally required for most financial professionals because financial advisors, tax preparers and certified public accountants (CPAs) generally don't face state mandates. But Oregon requires state-licensed investment advisers to maintain $1 million in errors and omissions (E&O) coverage, and many brokerage firms require advisors to carry professional liability coverage before working with them.

Do You Need Professional Liability Insurance As an Insurance Agent?

Rhode Island requires all resident insurance producers to carry and maintain E&O insurance with minimum limits of $250,000 per claim and $500,000 annual aggregate as a condition for getting and keeping their license. Other states generally don't have this legal requirement for insurance agents.

Do You Need Professional Liability Insurance as an Architect or Engineer?

Architects and engineers design buildings and infrastructure, subjecting them to similar professional liability risks and requirements. Ohio requires its architects and engineers providing professional design services to government agencies to have and maintain professional liability insurance during the period services are provided. Most states, like Texas, don't legally require coverage for these professionals.

Do You Need Professional Liability Insurance as an IT or Tech Consultant?

IT consultants face unique professional liability risks that general liability insurance won't cover. Technology errors and omissions claims include unauthorized access to private information, intellectual property infringement and system security failures that harm systems and make systems unavailable to users. A cybersecurity incident can lead to lawsuits seeking millions in damages.

Most states don't legally require IT consultants to carry professional liability insurance. However, if you work for government agencies like Sonoma County in California, you'll need professional liability coverage to get contracts. Many private clients also require proof of coverage before working with you, and you'll face expensive legal defense costs without insurance.

Professional Liability Insurance Requirements by State

State	Business or Profession	Requirements
Alabama	Attorneys	Must maintain $100,000/$300,000 professional liability coverage to participate in Alabama State Bar's Lawyer Referral Service program.
Alaska	Real Estate Professionals	Must provide proof of E&O insurance to the REC in order for your renewal to become effective. An initial applicant can obtain E&O insurance before they are issued a license.
California	Attorneys	Must inform clients in writing when they do not have professional liability insurance. No mandatory coverage requirement.
Colorado	Physicians and Physician Assistants (3+ years experience)	Must maintain minimum $1 million per incident and $3 million annual aggregate professional liability insurance.
Colorado	Real Estate Professionals	All of the professions regulated by the Division of Real Estate, except subdivision developers and appraisal management companies, are required to have errors and omissions (E&O) insurance.
Connecticut	Physicians	Must maintain minimum $500,000 per occurrence and $1.5 million aggregate professional liability insurance.
Connecticut	Physical Therapists	Must maintain minimum $500,000 per occurrence and $1.5 million aggregate professional liability insurance.
Connecticut	Dentists	Must maintain minimum $500,000 per occurrence and $1.5 million aggregate professional liability insurance.
Connecticut	Optometrists	Must maintain minimum $500,000 per occurrence and $1.5 million aggregate professional liability insurance.
Hawaii	Midwives	Must report settlements or arbitration awards if they do not possess professional liability insurance, but coverage itself is not mandatory.
Idaho	Attorneys	Must maintain minimum $100,000 per occurrence/$300,000 annual aggregate professional liability insurance if they represent private clients.
Idaho	Physician Assistants (3+ years experience)	Must obtain professional liability insurance if not covered by their facility or practice.
Idaho	Real Estate Professionals	Each licensee who is actively licensed under this chapter shall, as a condition to licensing, carry and maintain errors and omissions insurance to cover all licensed activities under the provisions of this chapter.
Illinois	Attorneys	Foreign legal consultants must provide "appropriate evidence of professional liability insurance or other proof of financial responsibility".
Indiana	Attorneys (Law Firm Entities)	Law office entities (PC/LLC/LLP) must upload current professional liability insurance declaration page annually for Certificate of Registration renewal.
Indiana	Midwives	Must maintain minimum $100,000 per incident/$300,000 aggregate professional liability insurance.
Iowa	Real Estate Professionals	All active licensees (broker, salesperson, corporation, LLC, partnership, etc.) must carry uninterrupted errors and omissions insurance coverage in Iowa. Proof of coverage must be provided with all new applications and when reactivating an inactive license.
Kansas	Health Care Providers	Must maintain minimum $500,000 per claim/$1.5 million annual aggregate basic professional liability coverage and participate in the Health Care Stabilization Fund as a condition of active licensure.
Kentucky	Real Estate Professionals	Errors and Omissions insurance is required for all real estate professionals in Kentucky.
Louisiana	Real Estate Professionals	All active licensees licensed are mandated to carry errors and omissions insurance to cover all activities contemplated under this Chapter.
Maryland	Advanced Practice Registered Nurses	Must notify patients in writing if they do not maintain professional liability insurance coverage or if coverage has lapsed.
Massachusetts	Physicians	Must maintain mandatory medical malpractice insurance coverage in minimum amount of $100,000 per occurrence/$300,000 aggregate if engaged in direct or indirect patient care.
Massachusetts	Attorneys	Must certify whether they are covered by professional liability insurance and provide carrier information as part of annual registration filing. Coverage itself is not mandatory.
Montana	Real Estate Brokers/Salespersons	Must maintain continuous professional liability insurance coverage during period of active licensure, with minimum coverage through board-approved group policy or independent policy.
Nebraska	Attorney Professional Organizations	Professional corporations, LLCs, and LLPs must maintain mandatory minimum professional liability insurance of $250,000 per attorney employed (up to $1M per claim) and $500,000 aggregate per attorney (up to $5 million).
Nebraska	Attorneys	Must certify annually whether covered by professional liability insurance and report any changes within 30 days. Coverage itself is not mandatory for individual attorneys.
Nebraska	Health Care Providers	Must maintain minimum professional liability insurance ($500,000/$1 million for physicians/CRNAs, $500,000/$3 million for hospitals until 2025, then $800,000/$3 million for all) and participate in Excess Liability Fund as qualifying health care providers under Hospital-Medical Liability Act.
Nebraska	Real Estate Professionals	The State Program Administrator will certify to the Real Estate Commission that all applicants for new licenses (or renewals) have proof of errors and omissions insurance. Coverage must specify not less than $100,000.00 combined single limit liability coverage for each occurrence.
Nevada	Real Estate Brokers/Salespersons	Must show proof of insurance for both Errors & Omissions and General Liability annually for certificate renewal.
New Jersey	Physician Assistants	Must maintain malpractice liability insurance or letter of credit as condition of licensure, effective August 1, 2016.
New Mexico	Health Care Providers	Must maintain minimum malpractice liability insurance and participate in Patient's Compensation Fund.
North Dakota	Home Inspectors	Certificate of liability insurance with errors and omissions insurance coverage in the amount of $100,000 or more covering all home inspection activities (Home Inspectors only).
Ohio	Acupuncturists/Oriental Medicine Practitioners	Must have professional liability insurance coverage in amount not less than $500,000.
Ohio	Professional Design Services (Public Projects)	Must maintain professional liability insurance during services rendered to public authorities, with amount sufficient as determined by public authority.
Ohio	Physicians, Podiatrists	Must provide written notice to patients if not covered by medical malpractice insurance prior to providing nonemergency professional services. Coverage itself is not mandatory.
Oklahoma	Attorneys (Public Defense Contracts)	Must provide proof of professional liability insurance to participate in OIDS county, appellate, capital trial and non-capital trial conflict contracts for indigent defense representation.
Oregon	Attorneys	Must maintain mandatory professional liability coverage through the Oregon State Bar Professional Liability Fund (PLF), which has been the mandatory provider since 1978. This is the only mandatory legal malpractice fund of its kind in the U.S.
Oregon	State Investment Advisers	Must maintain minimum $1 million errors and omissions insurance policy. Required for all Oregon-based state investment advisers since July 31, 2018.
Pennsylvania	Physicians and Health Care Providers	Must maintain medical professional liability insurance under the Medical Care Availability and Reduction of Error (Mcare) Act. The Mcare Fund reports noncompliant providers to licensing boards for license suspension or revocation.
Rhode Island	Insurance Agents/Producers	Must maintain professional liability insurance with minimum $250,000 per occurrence and $500,000 aggregate limits as a licensing requirement.
South Dakota	Real Estate Brokers/Salespersons	Must maintain continuous professional liability (errors and omissions) insurance coverage during period of active licensure. Available through SDREC group policy or independent policy from admitted carriers.
Tennessee	Real Estate Professionals	Proof of errors and omissions insurance policy required for licensing. All individual licensees must carry Errors and Omissions Insurance.
Washington	Attorneys	Must disclose to clients in writing if they do not maintain minimum $100,000 per occurrence/$300,000 aggregate professional liability insurance coverage, effective September 1, 2021.
Washington	Professional Limited Liability Companies (PLLCs)	Must maintain professional liability insurance of at least $1 million if members are required to be licensed to practice such profession, or face personal liability.
Washington	Health Care Providers (Workers' Compensation System)	Health care providers must maintain professional liability coverage of at least $1 million per occurrence and $3 million annual aggregate to participate as approved providers in the state workers' compensation system.
West Virginia	Attorneys (Financial Responsibility Disclosure)	Must disclose annually whether they maintain professional liability insurance with minimum $100,000 per claim/$300,000 aggregate, or alternative financial responsibility.
West Virginia	Attorney Limited Liability Organizations	Limited liability partnerships and professional limited liability companies engaged in law practice must carry $1 million in professional liability insurance.
West Virginia	Medical Professional Limited Liability Companies	Must provide written documentation of intent to maintain at least $1 million professional liability insurance coverage in business name of PLLC for authorization.
Wyoming	Real Estate Professionals	An applicant for a real estate license, a licensee renewing a license or an inactive licensee activating a license shall submit proof of insurance coverage. All licensees shall obtain and maintain errors and omissions insurance coverage under the group program or individual coverage.

Disclaimer:

Professional liability requirements change regularly, and some states don't require coverage by law. This information is for educational purposes only and should not be considered legal advice. Always consult with your state licensing board and a qualified attorney for the most current requirements and compliance obligations specific to your situation.

Federal Professional Liability Insurance Requirements

The Federal Acquisition Regulation (FAR) requires general liability, commercial auto liability and workers' compensation, but FAR doesn't standardize professional liability across all federal contracts. Each agency and contract sets its own additional insurance requirements beyond FAR minimums.

Professional services contracts, like engineering, architecture or consulting, typically include professional liability requirements with coverage amounts set by the contracting officer. Check specific requirements with your contracting officer since each federal contract has unique insurance provisions based on project scope and risk.

Is Required Professional Liability Coverage Enough?

Required professional liability coverage often meets only the bare minimum for legal compliance. You'll need additional protection to cover gaps that professional liability doesn't address.

Tail Insurance

Essential for claims-made PL policies, tail coverage protects you when claims get filed after your policy expires for work you did while covered. You'll need this when switching insurers, retiring or changing careers.

General Liability Insurance

Professional liability won't help if a client trips in your office or you accidentally damage their property. health care providers, consultants and architects need general liability to handle physical incidents outside professional mistakes.

Cyber Liability Insurance

Cyber attacks and data breaches expose sensitive client information, triggering expensive notification and legal costs. Clients increasingly demand proof of cyber coverage from financial advisors, health care professionals and IT consultants before signing contracts.

Workers' Compensation Insurance

Most states require this coverage once you hire employees, but solo practitioners often miss it when bringing on their first assistant. It covers medical costs and lost wages for workplace injuries that professional liability doesn't touch.

Commercial Auto Insurance

Your personal auto policy excludes business use, leaving you exposed when driving to client sites. Real estate agents, consultants making house calls and health care professionals need commercial coverage for work-related driving.

Umbrella Insurance

When major claims exceed your other policy limits, umbrella coverage protects personal assets. High-risk professionals like surgeons or attorneys handling complex cases rely on umbrella policies as their financial safety net.

Do You Need Professional Liability: Bottom Line

Professional liability insurance isn't legally required in most states, but high-risk professionals like doctors, attorneys and financial advisors should carry this coverage due to costly lawsuit exposure. Professionals also need general liability insurance, cyber coverage, workers' compensation insurance and tail insurance for complete protection.

Insurance for Professional Liability: FAQ

MoneyGeek's experts answered common questions about professional liability insurance requirements to help you determine if you need coverage:

Do I need professional liability insurance?

Professional liability insurance needs depend on your profession and state because most professionals aren't legally required to carry coverage, though some states mandate this insurance for attorneys, doctors and real estate agents. High-risk professionals should get this coverage anyway to protect against costly lawsuits.

When is professional liability insurance required by law?

Professional liability insurance requirements vary by state with specific mandates. Colorado, Massachusetts and Connecticut require doctors to carry malpractice coverage, while Oregon and Idaho mandate this coverage for attorneys. Rhode Island requires insurance agents to maintain E&O coverage as a licensing condition.

Who should carry professional liability insurance?

Health care professionals face the highest lawsuit risk and should carry professional liability insurance, followed by attorneys, financial advisors, consultants, architects, engineers and IT consultants. Even without legal requirements, these professions often need this coverage because clients expect this protection.

What happens if I don't have the required professional liability insurance?

Without required professional liability insurance, professionals pay legal defense costs and settlements out of pocket, which easily reach hundreds of thousands of dollars. Some states may also suspend professional licenses or prevent professionals from working until they obtain this coverage.

Is the minimum required professional liability coverage enough?

Minimum required coverage rarely provides adequate protection because it usually meets only legal minimums. Professionals likely need tail insurance for claims-made policies, plus general liability, cyber coverage, workers' compensation and potentially umbrella insurance for complete protection.

How does professional liability insurance work?

Professional liability insurance operates on a "claims-made" basis, meaning professionals have coverage when someone files a lawsuit, not when the mistake happened. This coverage pays legal bills, court judgments and protects business assets from being seized.

Do I need general liability or professional liability insurance?

General liability and professional liability insurance serve different purposes for professionals. General liability covers physical accidents, like client injuries in your office, while professional liability covers mistakes in your services or advice. Most professionals need both types of coverage.

About Mark Fitzpatrick

Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.

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sources

Colorado Medical Board. "Malpractice Insurance Requirements." Accessed August 21, 2025.
Connecticut Department of Public Health. "Physician Professional Liability Insurance Requirements." Accessed August 21, 2025.
County of Sonoma. "Professional Liability Explained." Accessed August 21, 2025.
Idaho State Bar. "2018 Malpractice Coverage Requirement – General Information." Accessed August 21, 2025.
Massachusetts Division of Insurance. "Medical Malpractice Insurance." Accessed August 21, 2025.
Ohio Revised Code. "Section 4731.143.." Accessed August 21, 2025.
Oregon Legislature. "Chapter 009 - Oregon State Bar." Accessed August 21, 2025.
Oregon Division of Financial Regulation. "Bulletin No. Dfr 2022-6: Errors and Omissions Liability Coverage for State Licensed Investment Advisers." Accessed August 21, 2025.
Rhode Island General Assembly. "RI Gen. Laws § 27-2.4-23." Accessed August 21, 2025.
Texas Board of Professional Engineers. "Enforcement FAQs." Accessed August 21, 2025.