Question 1

How is professional liability different from general liability?

Accepted Answer

GL covers third-party bodily injury and property damage from your premises and operations — a client who slips in your office. Professional liability covers financial harm from your professional advice, services, or work product — a client who lost money because of an error in your audit, contract, or design. They're not interchangeable: a GL policy will deny a professional negligence claim, and a professional liability policy will deny a slip-and-fall.

Question 2

Why is professional liability written claims-made?

Accepted Answer

Professional services produce claims that often surface years after the work — a tax mistake discovered three years later, a construction defect emerging after warranty period, a contract negligence found at deal failure. Claims-made coverage triggers when the claim is filed during the policy period, with the retroactive date controlling how far back covered work extends. This structure works because it lets carriers price based on current claim trends rather than guessing future verdicts on decades-old work.

Question 3

What does professional liability NOT cover?

Accepted Answer

Intentional misconduct (fraud, deliberate deception), known-prior-claims at policy inception, regulatory fines and penalties (with limited exceptions), bodily injury and property damage (those are GL), professional services performed before the retroactive date, and work for clients excluded by the application. Some policies exclude specific high-risk service categories — review the schedule of covered services carefully if you offer mixed practice areas.

Question 4

What's tail coverage and when do I need it?

Accepted Answer

Tail coverage (extended reporting period) extends the time during which a claim can be filed and still trigger coverage after the policy expires. It's essential when retiring, selling the practice, switching carriers, or dissolving. Without tail, claims that arise from past work AFTER the policy ends have no coverage. Standard tail options are 1, 3, 5, and 6 years (or unlimited) priced as a multiple of the expiring annual premium. Always price tail BEFORE letting a policy expire — many carriers won't sell it after termination.

Question 5

Are defense costs inside or outside the policy limit?

Accepted Answer

On most professional liability policies, defense costs are inside the limit — meaning legal fees reduce the amount available for settlement. A $1M policy with $300K of defense costs has $700K left for settlement. Some policies offer 'defense costs outside the limit' as an upgrade, which keeps the full $1M available for settlement and pays defense separately. Defense-outside policies are more expensive but produce dramatically better claim outcomes, especially in long-litigation matters.

Question 6

Does professional liability cover license defense?

Accepted Answer

Most modern policies include license defense coverage as a sublimit (typically $25K–$100K), paying for legal representation in disciplinary proceedings before licensing boards. Florida professional licensing boards (Bar, CPA, real estate, architecture, engineering) actively investigate consumer complaints and can suspend licenses, issue fines, or require remedial education. License defense is invaluable because most board complaints don't reach the threshold of an actual claim but still require professional representation.

Question 7

How do I size my professional liability limits?

Accepted Answer

Start with the largest single client engagement value, the largest plausible damages from a single error, and any contractual minimums. Most Florida solo professionals carry $1M/$1M; small firms (under 10 professionals) typically $2M–$3M; mid-size firms $5M+. High-risk practice areas (M&A advisory, complex litigation, large construction design) should carry $5M–$10M with excess on top. The right answer balances client requirements, the liability you'd face on your worst case, and the cost of higher limits.

Professional Liability Insurance

Professional Liability

What's Covered

How It Works

Quote Your Professional Liability Coverage

Understanding Professional Liability

Who needs this

How it pays out

The Florida reality

Professional Liability — Frequently Asked Questions

Stay Informed

Not sure what coverage you need?