New York , States

New York Professional Liability Insurance: What to Know

October 16, 2025

Why New York Businesses Need This Coverage

If you run a business in New York that gives advice or professional services, you face real legal risks. A small mistake, missed deadline, or misunderstanding can lead to big lawsuits. That’s where New York professional liability insurance helps. Also known as errors and omissions insurance NY, this policy protects you from legal costs tied to service errors, negligence, or broken contracts.

In many cases, it’s not just smart to carry E&O insurance—it’s required.

Who Must Carry Professional Liability Insurance in New York?

New York law doesn’t require E&O coverage for every business. But some industries and contracts do.

Common professions that need coverage:

Doctors and Healthcare Providers: New York state does not generally require doctors to carry malpractice insurance. However, physicians who are specifically placed on probation with practice monitoring after professional misconduct determinations are legally required under Public Health Law § 230 to maintain medical malpractice insurance coverage with limits no less than two million dollars per occurrence and six million dollars per policy year.

Attorneys: New York does not require attorneys to carry malpractice insurance, but many choose to carry it for protection.

Financial Advisors: May be required by some employers or contracts, especially when managing client assets.

Engineers and Contractors: May be required by specific contracts, clients, or certain public project requirements.

Consultants and Tech Firms: Many clients won’t sign contracts without proof of E&O.

Not having insurance when it’s required can trigger fines, lawsuits, or penalties. Even if you’re a small firm, E&O coverage protects your business—and your personal finances—from sudden legal costs.

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.

What Does Errors and Omissions Insurance Cover?

Errors and omissions insurance NY policies help you in several ways:

Service Mistakes: Like an accountant who misfiles taxes or a contractor who overlooks a design flaw.

Missed Deadlines or Oversights: If you’re late delivering a service or skip a required step.

Accusations of Negligence: Even if you did nothing wrong, your policy helps cover legal defense.

Legal Costs and Settlements: These policies often pay for lawyers, court costs, and damages—up to your coverage limits.

Your insurer handles claims under rules enforced by the New York Department of Financial Services (DFS). The DFS oversees insurance companies and provides consumer protections under New York insurance laws.

New York Professional Liability Cost Factors

Your rate depends on:

Your profession
Location affects pricing
Claims history

Getting quotes from different carriers helps you find the best fit.

How the Claims Process Works in New York

If something goes wrong—even before a client files a lawsuit—you must notify your insurer fast. That’s critical under “claims-made” rules.

The process looks like this:

Report the issue immediately. Even a hint of a lawsuit must be reported.
Submit proof. Contracts, emails, notes—anything tied to the situation.
Your insurer assigns a lawyer and starts investigating.
You may settle or go to mediation before court.
If approved, your insurer pays damages, legal fees, or both.

Failing to report claims on time may void coverage. That’s why renewals matter—don’t let your policy lapse, even if you’re between clients.

The New York Department of Financial Services regulates insurance companies operating in the state and provides consumer complaint resolution services for insurance disputes.