Professional liability insurance is rarely required by general state law, but there are specific situations where coverage is mandatory or contractually expected:
Professional Liability Insurance Requirements
Professional liability insurance isn’t usually mandated by general statutes, but industry regulations, professional licenses and contracts often require it.
Our guide explores how requirements for professional liability insurance vary by profession, licensing board and contracts along with how you can meet them.
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Updated: January 31, 2026
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Is Professional Liability Insurance Required By Law?
Licensing & regulatory boards | Lawyers, healthcare providers, accountants, architects and other regulated professionals | State board regulations and license renewal applications |
Professional certification programs | Certain industry certifications | Certification body requirements |
Government contracts | Consultants and professional services contractors | Contract specifications and procurement registration portals |
WHERE TO FIND REQUIREMENTS OUTSIDE OF ONLINE SOURCES
If requirements aren’t clearly outlined online, contact your state licensing board, professional association or procurement officer directly. Look for terms like “errors & omissions,” “professional liability,” “certificate of insurance,” and “minimum limits.” to determine where a requirement may be located.
Professional Liability Insurance Requirements By State & Profession
State or profession-specific requirements vary widely. Some licensing boards mandate professional liability insurance for certain professions, while in most states it’s not generally required by law.
Use the table below as an initial reference point and always verify your exact obligations with the relevant authority since rules can change.
Oregon | Attorneys | Mandatory participation in state bar Professional Liability Fund | $300,000 per claim / $300,000 annual aggregate | Oregon State Bar PLF rules |
Pennsylvania | Healthcare providers (MCARE participants) | Participation in state malpractice program | Common structure: $500,000 per occurrence / $1,500,000 aggregate primary layer, total program structure to $1M / $3M | MCARE Act / PA Insurance Dept |
Indiana | Qualified healthcare providers | Eligibility for Patient’s Compensation Fund | $500,000 per occurrence / $1,500,000 annual aggregate | Indiana Medical Malpractice Act |
Nebraska | Healthcare providers in Excess Liability Fund | Participation in state excess malpractice fund | $500,000 per occurrence / $1,000,000 annual aggregate underlying | Nebraska DOI Med Mal Fund |
Texas | Real estate inspectors | Statutory licensing requirement | $100,000 per occurrence professional liability | Texas Occupations Code / TREC |
Nevada | Structure / home inspectors | Licensing regulation | Minimum $100,000 E&O | Nevada Administrative Code 645D |
Alaska | Real estate agents & brokers | Required for license activation & renewal | Proof of E&O required (numeric limits set by program) | Alaska Real Estate Commission |
Colorado | Real estate | Mandatory group E&O program participation | State-set program limits (historically ~$300k aggregate) | Colorado Division of Real Estate |
Idaho | Real estate agents | Licensing requirement | Proof of E&O required | Idaho Real Estate Commission |
Iowa | Real estate agents | Licensing statute | $100,000 annual aggregate minimum | Iowa Real Estate Commission rules |
Kentucky | Real estate agents | License condition | Proof of E&O required | Kentucky Real Estate Commission |
Louisiana | Real estate agents | Licensing statute | $100,000 per claim / $300,000 aggregate (individual); higher firm minimums | Louisiana Real Estate Commission |
Mississippi | Real estate agents | License requirement | $100,000 aggregate minimum | Mississippi Real Estate Commission |
Montana | Real estate agents | Required at application/renewal | Proof of E&O required | Montana Board of Realty Regulation |
Nebraska | Real estate agents | Licensing program | Typical state program minimum $300,000 aggregate | Nebraska Real Estate Commission |
New Mexico | Real estate agents | Licensing condition | Proof of E&O required | NM Real Estate Commission |
North Dakota | Real estate agents | Licensing statute | Proof of E&O required | ND Real Estate Commission |
Rhode Island | Real estate agents | Licensing requirement | $100,000 minimum coverage | RI Department of Business Regulation |
South Dakota | Real estate agents | Active license requirement | Proof of E&O required | SD Real Estate Commission |
Tennessee | Real estate agents | Statutory license condition | E&O required (limits set by commission program) | TN Dept. of Commerce & Insurance |
Wyoming | Real estate agents | Licensing rule | Proof of E&O required | Wyoming Real Estate Commission |
When Is Professional Liability Insurance Required by Contracts?
Even when there’s no legal requirement, you’ll often need to meet professional liability (errors & omissions) insurance requirements if you provide services under a contract. If you sign agreements with clients, corporations, government agencies or prime contractors, expect to show proof of coverage for mistakes, negligence or failure in your professional services.
Contract requirements appear in these situations.
Client service agreements | Consulting, design work, IT services, accounting, marketing, advisory roles | COI showing $1M per claim professional liability coverage (sometimes higher) |
Master service agreements (MSAs) | Ongoing vendor relationships, enterprise contracts, multi-year engagements | Professional liability with specified limits and proof of coverage maintained throughout contract term |
Government or public contracts | Municipal consulting, engineering, healthcare services, tech contracts | COI with stated E&O limits and continuous coverage requirement |
Subconsultant agreements | Design, engineering, specialty consulting under a prime contractor | Professional liability coverage that matches the prime contract limits |
Technology / SaaS vendor contracts | Software providers, cybersecurity services, data processing | E&O coverage often combined with cyber liability, with minimum limits stated in agreement |
Healthcare facility credentialing | Hospitals, clinics, provider networks | Malpractice/professional liability proof with limits meeting facility requirements |
How to Meet Professional Liability Insurance Requirements
When you're required to have professional liability insurance, simply “having a policy” isn’t enough. Your coverage, dates, wording and documentation must line up exactly with what the agreement or regulation says.
Here’s how to make sure you’re compliant.
- 1
Match your coverage limits to the contract
Professional liability limits are usually stated separately from general liability.
Check:
- Per claim limit: the most your policy pays for a single claim
- Annual aggregate limit: the most your policy pays in a policy year
Many contracts start at $1 million per claim, though higher-risk services may require more.
If your limits are too low, you may need to:
- Increase limits at renewal
- Add excess professional liability coverage
- Ask the client if lower limits are acceptable for small scopes of work
- 2
Confirm your policy covers the services in the contract
Professional liability policies only cover the services listed in your policy wording.
Compare:
- The scope of work in your contract
- The “professional services” definition in your policy
If your contract includes advisory, consulting, design, technical or specialized services not clearly covered in your policy, a claim may be denied.
- 3
Make sure your claims-made policy timing works
Most professional liability policies are claims-made, which means coverage depends on timing.
You must have:
- Coverage active when the work is performed
- Coverage active when a claim is reported
Also check:
- Your retroactive date is earlier than the project start date
- You don’t let coverage lapse during or after the contract term
- 4
Understand post-project coverage requirements
Some contracts require you to maintain professional liability insurance after the work is finished.
This may mean:
- Keeping your policy active for a set number of years
- Purchasing tail coverage (extended reporting period) if you stop carrying the policy
Without this, claims that arise later from past work may not be covered.
- 5
Provide the right documentation
Clients usually require proof of coverage before work begins.
Typical documents include:
- Certificate of Insurance (COI)
- Sometimes the declarations page
- Any required endorsements
Your COI should show:
- Correct limits
- Policy effective dates
- Retroactive date if requested
- 6
Keep coverage continuous
Gaps in professional liability coverage can remove protection for past services.
Set reminders to:
- Renew on time
- Avoid cancellation or lapse
- Update certificates when policies renew
Requirements For Professional Liability Insurance
Meeting professional liability insurance requirements is about precision and continuity. Limits matter, but so do your service definitions, policy dates, retroactive coverage and ongoing maintenance. A small mismatch can leave you noncompliant or uncovered, even if you technically have insurance.
So use this as your coverage floor so you can determine how much professional liability coverage you need past your requirements to protect you financially.
Professional Liability Insurance Requirements: Next Steps
A good starting point for most businesses is to step back and look at professional liability insurance as part of your overall risk strategy, not just a contract requirement. The goal is to make sure your coverage reflects the type of services you provide, the financial impact your work could have on clients and the kinds of agreements you expect to sign, not just the smallest requirement in front of you today.
From there, what makes sense next depends on where you are in your business journey.
If you already have coverage and mainly want to confirm you’re protected:
Your focus is alignment. Review your policy’s limits, covered services and claims-made structure with your actual work. This helps you understand whether your insurance is built for your real exposure, not just the minimum needed to satisfy paperwork.
If you’re starting to take on larger or more complex projects:
This is a signal to reassess how much financial risk your services create. Larger clients and higher-stakes work typically mean higher expectations around limits, continuity of coverage and service definitions. Planning ahead can prevent last-minute policy changes when a new opportunity comes up.
If your services offered have changed:
Many businesses grow into new advisory, technical or specialized roles without updating their professional liability coverage. Comparing what you do today to how your policy defines professional services can reveal gaps that weren’t obvious before.
If you’re signing more formal contracts than you used to:
Insurance becomes less about “having a policy” and more about predictability. Standardizing your limits, maintaining continuous coverage and keeping documentation ready can make future agreements easier to navigate.
If you don’t currently carry professional liability insurance:
Now is the point where understanding your exposure becomes the first step. Consider how your advice, recommendations or services could lead to financial loss for a client, and use that as the foundation for how coverage should be structured.
sources
- Pearl Insurance. "Which States Require Real Estate Professionals to Carry E&O Insurance?." Accessed February 5, 2026.
- ERGO NEXT. "Real Estate License & Insurance Requirements by State." Accessed February 5, 2026.
- McKissock Learning. "Errors and Omissions Insurance for Real Estate Agents." Accessed February 5, 2026.
- CRES Insurance. "When Real Estate Errors & Omissions Insurance Is Required." Accessed February 5, 2026.
- RISC (Real Estate Ins. Service Co.). "RISC – Real Estate Licensee E&O Insurance State Requirements FAQ." Accessed February 5, 2026.
- Insureon. "State Requirements for Professional Liability Insurance." Accessed February 5, 2026.