The gap that general liability doesn't fill
General liability covers what happens to people and things in the physical world — a customer slips, you damage a client's property, your employee breaks something at a job site. Professional liability covers a different kind of claim entirely: allegations that your work caused financial harm. A consulting recommendation that didn't pan out. A design error that led to costly rework. A contract you drafted that missed an important clause. Advice that didn't account for something a reasonable professional should have.
Who needs professional liability
If your business sells advice, expertise, design, judgment, or specialized services, you probably need professional liability. Industries where it's near-universal:
- Consultants of all kinds (management, IT, marketing, HR, etc.)
- Real estate agents, brokers, and property managers
- Architects, engineers, and design professionals
- Contractors with design-build responsibility
- Accountants, bookkeepers, and tax preparers
- Insurance and financial advisors
- Attorneys (often called legal malpractice)
- Healthcare providers (medical malpractice is a specific subtype)
- IT services, web developers, software firms
- Marketing agencies and content creators
- Educational consultants and tutors
- Notaries and signing agents
How professional liability claims actually arise
- Missed deadlinesA client says you failed to deliver on time and that delay caused financial loss.
- Inadequate adviceA consulting recommendation didn't account for something material; the client sues for the resulting losses.
- Errors in deliverablesA contract, design, report, or product specification contained a mistake that cost the client money.
- Failure to discloseYou knew (or should have known) something important and didn't communicate it.
- Scope creep disputesThe client believes deliverables were promised that you don't believe were in scope.
- Negligent supervisionAn employee or contractor under your responsibility made an error.
Claims-made vs. occurrence — and why it matters
Most professional liability is written on a claims-made basis, meaning the policy only responds to claims first reported during the policy period. This is different from general liability, which is typically written on an occurrence basis. Several implications:
- Retroactive date. Claims-made policies have a retroactive date — work performed before that date isn't covered. When you switch carriers, you generally want the retroactive date to stay the same.
- Continuous coverage matters. A gap between claims-made policies can create uncovered exposure.
- Tail coverage. When you retire or change carriers, you may need extended reporting period coverage ("tail") to respond to claims that arise later for past work.
We walk through this carefully with every professional liability client. The mechanics are subtle and the wrong decision can be expensive.
Defense costs are huge. Even baseless professional liability claims regularly cost $25,000-$100,000+ to defend. Most professional liability policies include defense within the limits — so a long defense can deplete coverage before damages are even paid. We pay attention to this structure.
Common Oklahoma professions and typical limits
- Real estate agents/brokers: $300K-$1M per claim, often required by brokerage
- Architects/engineers: $1M-$5M per claim, often required by project contracts
- IT consultants: $1M per claim is common; clients often require this minimum
- Accountants/bookkeepers: $250K-$1M depending on client size
- Marketing agencies: $1M per claim; covers content/copyright exposure
- Independent contractors in trades: $250K-$1M depending on contract scope
What professional liability does NOT cover
- Bodily injury or property damage (that's GL)
- Intentional acts or knowingly false statements
- Criminal acts
- Claims related to insolvency or bankruptcy
- Some employment-related claims (need EPLI)
- Cyber breaches (need cyber liability)
- Bodily injury claims from professional services in some structures (medical malpractice is structured differently)
