If your business gives advice or licensed services in Arizona, professional liability insurance is more than smart—it could save your business. One mistake, even if unintentional, can lead to expensive lawsuits.
This guide explains who needs Arizona professional liability insurance, what it covers, what it costs, and how to handle a claim under state rules.
Who Needs This Coverage in Arizona?
Arizona doesn’t require professional liability insurance (also called E&O) for every business. But some jobs must carry it by law or contract.
You may be required to carry PLI if you are a:
- Healthcare Provider: Arizona licensing boards often require Arizona malpractice insurance. Major hospitals like Banner Health, Valleywise Health, and Phoenix Children’s Hospital require physicians with admitting privileges to carry coverage.
- Attorney: While not always required, many lawyers carry Arizona errors and omissions insurance to meet client or bar association standards.
- Architect or Engineer: Not legally required but strongly recommended. Design mistakes or project delays can cause huge losses.
If you don’t carry coverage when it’s required:
- You could lose your license.
- You might have to pay legal costs and damages out of pocket.
- You could lose contracts with clients who require proof of insurance.
Even if you’re not required to carry it, getting coverage is still smart—especially in Arizona’s fast-growing, high-risk business climate.
What Does It Cover?
Professional liability insurance Arizona protects your business when a client says you made a mistake or didn’t meet your professional duties.
Most policies cover:
- Legal Defense Costs: Pays your lawyer and court costs—even if you’re not at fault.
- Settlements or Judgments: Covers money you must pay if found liable.
- Mistakes and Omissions: Covers errors like giving wrong advice or missing deadlines.
- Contract Issues: Helps if a client says you didn’t deliver as promised.
This coverage helps meet Arizona business insurance regulations and shows clients that your business is responsible and protected.
Common Claims in Arizona
Many professional liability claims in Arizona happen because of simple mistakes or service delays. Others are caused by high client expectations or Arizona’s unique business risks.
Examples include:
- Healthcare Error: A misdiagnosis leads to harm. The provider’s Arizona professional liability insurance covers the case.
- Design Flaw: An engineer misses a safety code. The builder sues for delays and costs.
- Bad Advice: A consultant gives wrong financial guidance. The client sues for lost money.
Arizona-specific risks also play a role:
- Heatwaves can delay construction and cause project failures.
- Fast growth in cities like Phoenix and Tucson raises legal risks.
- Lawsuits are common in healthcare and legal sectors.
These issues explain why many businesses carry Arizona errors and omissions insurance, even when it’s not legally required.
Many professionals confuse liability policies with workers’ comp. Our guide on whether workers’ compensation is the same as liability insurance explains the differences and why both may be essential.
Arizona PLI Costs and Coverage
Costs depend on:
- Your Job Type: Riskier jobs cost more.
- Your Business Size: More employees or bigger projects raise costs.
- Claims History: A past claim raises your premium.
- Location: Urban areas like Scottsdale tend to cost more.
- Policy Limits: Higher coverage costs more—but offers better protection.
Use our calculator below to get your exact Arizona PLI costs and coverage options based on your profession and location.
The Claims Process in Arizona
If you face a lawsuit or think one might happen, act fast. Arizona has rules for how insurance companies must handle claims.
Here’s how the Arizona professional liability claims process works:
- Report the Claim Right Away: Tell your insurer as soon as there’s a problem.
- Get a Response: The insurer must acknowledge receipt within 10 working days.
- Send Documents: You’ll need to provide contracts, emails, and anything related.
- Claim Investigation: The insurer must complete the investigation within 30 days after notification, unless it cannot reasonably be completed in that time.
- Accept or Deny: The insurer must accept or deny your claim within 15 working days after receiving proper proof of loss.
- Additional Time: If more time is needed, the insurer must notify you within 15 working days explaining why, then every 45 days thereafter.
- Resolve the Claim: Some settle fast. Others may go to mediation or court.
If you don’t follow Arizona’s rules or carry a valid policy, you may lose your legal right to a defense—and have to pay all claim costs yourself.
Final Thoughts and What To Do Next
Arizona professional liability insurance protects your business when something goes wrong. It covers legal costs, client lawsuits, and contract disputes—and helps you meet Arizona PLI requirements or client demands.
Here’s what to do now:
- Check if your profession requires insurance under Arizona business insurance regulations.
- Review contracts to see if PLI is required.
Call our experts at (855) 718-7552 for help with your profession’s needs.
Don’t wait until after you’re sued. Get covered today and protect your business.
