Professional Liability Insurance

What is Professional Liability Insurance and Why is it Important?

Professional liability insurance is a form of liability insurance necessary to help protect businesses in the Service or Consultant industry, ensuring you don’t suffer potentially significant losses that defending and/or settling a lawsuit can bring. The Kennedy Agency understands Texas businesses and will help you select the right amount of coverage, so you can go back to serving your clients with the peace of mind that comes from knowing that you’re covered.

Who Needs Professional Liability Insurance?
If you are providing services to clients, you face the risk of a lawsuit in the case of a mistake, even if the facts are in dispute. Traditional professionals like doctors, lawyers, and CPAs face this risk, as do other professionals like business or IT consultants, real estate agents, electricians, and even hairstylists.

Many different scenarios could lead to a professional liability lawsuit. An IT consultant who accidentally deletes important client data, a lawyer who mishandles a case, or a real estate agent who fails to achieve the highest possible sales price for her client could all face litigation. A software developer could be sued if her client’s website crashed causing lost sales, and a delivery service could be sued if the client contends that deliveries were not made on time.

Keep in mind it doesn’t necessarily matter if you were actually at fault because if the client feels that he has sufficient grounds to argue that you were, he can file a lawsuit. Some claims can also be subjective, for example, a client may contend that you failed to perform the required services under a contract, while you believe that you did.

What Does Professional Liability Insurance Cover? What Does it Not Cover?


  • Mistakes and omissions that a service provider makes while performing their service
  • Legal fees
  • Settlement amounts

Not Covered

  • Medical expenses or bodily injury are typically only covered under doctor’s malpractice insurance, for other professions, general liability insurance covers this area
  • Criminal prosecution costs
  • Legal liabilities not listed in the policy
  • Cyber liability (data breach and other technology-related issues) often require a separate policy