Professional liability insurance in the state of New York

Any business that provides a professional service or expert advice should carry professional liability coverage, as a client could sue if your service or advice causes accidental harm. Even an unwarranted lawsuit can be expensive between attorney’s fees, court costs, or a settlement.

Industries often at risk for professional liability claims include:

New York law does not require small business owners to have a professional liability insurance policy. However, you might need this coverage to sign a contract or to get a license in your field.

Professional liability insurance covers your legal defense costs if you’re sued over a mistake in your professional work, and it can be affordable for small businesses.

Even if you’ve done nothing wrong, a legal battle can be expensive. In addition to your attorney’s hourly rate, you’ll likely be charged for administrative costs such as copying, filing, and travel expenses. You may also have to pay for expert witnesses to testify on your behalf, a court-ordered legal judgment, or a settlement to avoid trial.

Professional liability insurance covers all of the above, up to the coverage limits of your policy. The policy limits you choose should take into account how expensive it can be to fight a professional liability lawsuit. You also need to determine the amount of coverage required to obtain a contract or work in a certain field.

For example, if a hospital in New York requires their physicians to have professional liability coverage, the minimum liability limit they must carry is usually $1,000,000 per-occurrence and $3,000,000 aggregate per year/policy period.

A professional liability policy covers a wide range of lawsuits, but it will not cover intentional harm you cause to others. Most insurance companies exclude:

• The illegal violation of any law, regulation, or statute
• Any services you provide under the name of another entity, such as a subsidiary business or organization not listed on your policy
• Defamation, such as libel and slander
• Discrimination

General liability insurance does not include professional liability coverage—they are both different types of business liability insurance. Commercial general liability covers common business risks and liability claims such as customer bodily injuries, customer property damage, and advertising injuries.

If a customer falls and suffers an injury at your workplace, it would be covered by your general liability policy, which would include your legal costs. If someone sues you over unsatisfactory work, it would be covered by your professional liability coverage.

Read more about general liability vs. professional liability insurance.

General liability and professional liability are often the first two policies bought by small business owners. However, they are not the only coverage you might need.

Workers’ compensation insurance is required for New York businesses that have employees. Workers' comp covers medical costs and lost wages for work-related injuries and illnesses.

Commercial property insurance covers your business property, including your building. It’s often required to sign a commercial lease.

A business owner’s policy (BOP) combines general liability coverage and commercial property insurance. It's usually less expensive than buying each policy separately.

Commercial auto insurance is required in New York for all commercial vehicles. It covers the cost of an accident involving your business vehicle.

Cyber insurance covers the cost of dealing with a data breach or malicious software attack.

Employment practices liability insurance (EPLI), a type of management liability insurance, protects against lawsuit expenses related to claims of harassment, discrimination, and wrongful termination that professional liability typically won’t cover.

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