
Professional liability insurance, also known as errors and omissions insurance, is a type of insurance that protects professionals from lawsuits and financial losses resulting from their work.
In Michigan, professional liability insurance is a must-have for many professionals, including lawyers, doctors, and architects.
This type of insurance helps to cover the costs of defending a lawsuit and paying any resulting damages or settlements.
Michigan law requires certain professionals to carry professional liability insurance, including attorneys, accountants, and engineers.
What Is Professional Liability Insurance?
Professional liability insurance is a type of business insurance that helps protect Michigan business owners from financial harm caused by professional mistakes or accusations of negligence.
This insurance can cover business mistakes that result in financial harm to another business or client, accusations of inaction, wrongdoing, and other kinds of professional negligence, as well as misrepresentation of professional services.
Professional liability insurance can help cover costs related to various situations, such as a real estate agent showing a furnished property to prospective buyers and one of them accidentally damaging a wall.

Here are some examples of what professional liability insurance can help cover:
- Business mistakes that result in financial harm to another business or client
- Accusations of inaction, wrongdoing, and other kinds of professional negligence
- Misrepresentation of professional services
For instance, a client suing an accountant in Grand Rapids for making a mistake in their paperwork can be covered by professional liability insurance, which can help the accountant cover legal defense costs to fight the lawsuit.
Who Needs Professional Liability Insurance?
If you're a business owner in Michigan, you should consider carrying professional liability insurance.
Professionals like accountants, real estate agents, and business consultants rely on this type of insurance as common coverage for professional services.
Businesses operating in industries such as finance, architecture, and law often require professional liability insurance to protect against costly mistakes and lawsuits.
Even an unwarranted lawsuit can be expensive, with attorney's fees, court costs, or a settlement totaling in the thousands.
Industries often at risk for professional liability claims include those that provide expert advice, such as financial advisors and architects.
Having professional liability insurance in Michigan can help resolve issues quickly, protecting your company's reputation and avoiding client confrontations.
Michigan Requirements and Regulations

Michigan law doesn't require small business owners to have professional liability insurance, but you might need it to sign a contract or get a license in your field.
Most businesses in the state aren't required by law to carry professional liability insurance. However, professionals may need this coverage to comply with standards in certain industries.
You might need professional liability insurance to work on Michigan state or local government projects, or if your employer requires you to carry malpractice insurance.
Business owners in Michigan often choose professional liability insurance coverage even when it's not required, as it can be valuable for their business.
Professional liability insurance may be required to obtain or renew certain business licenses or certifications, depending on your industry and where you work.
Protection and Financial Security
Professional liability insurance in Michigan provides financial protection for businesses that offer professional services or advice. This type of insurance is also known as errors and omissions insurance (E&O).

If you're accused of professional negligence or make a business mistake, having this insurance can help you cover the costs of lawsuits related to your work performance.
Here are some examples of what is covered under professional liability insurance in Michigan:
- Accusations of negligence, such as an architect who creates an unsafe building design.
- Work mistakes and oversights, such as an accountant who makes a mathematical error.
- Missed deadlines and undelivered services, such as a web designer who fails to build a website before a client's busy season.
- Inaccurate advice, such as an attorney who misinterprets a legal statute.
Financial Protection
Having a solid financial safety net can give you peace of mind as a small business owner in Michigan.
Professional liability insurance can help protect your business from financial losses due to professional negligence or mistakes.
The average cost of professional liability insurance in Michigan is $59 per month, which is lower than the national average of $66 per month.
Factors that affect the cost of professional liability insurance include the type of business, industry, and similar risk factors, as well as coverage limits and deductible.
Here are some common types of claims that professional liability insurance covers:
- Accusations of negligence, such as an architect who creates an unsafe building design.
- Work mistakes and oversights, such as an accountant who makes a mathematical error or fails to include the right data in their work.
- Missed deadlines and undelivered services, such as a web designer who fails to build a website before a client's busy season.
- Inaccurate advice, such as an attorney who misinterprets a legal statute that results in a costly mistake.
Benefits of Insurance Removal
If you're considering removing professional liability insurance, you should know that it's highly recommended to have it, especially if you offer professional services directly to customers.

The state of Michigan doesn't require businesses to have professional liability insurance, but having it can provide financial security in case of a lawsuit.
If you regularly give advice to clients, you'll want to consider the risks of not having professional liability insurance.
Here are some scenarios where professional liability insurance is especially important:
- Having to sign a contract that requires you to carry coverage
- Offering professional services directly to customers
- Regularly giving advice to clients
In these cases, removing professional liability insurance can leave your business vulnerable to financial losses.
Exclusions and Limitations
Professional liability insurance in Michigan is a valuable tool for protecting your business, but it's essential to understand what it doesn't cover.
It's not a catch-all policy, and it's crucial to know its exclusions.
Professional liability insurance won't cover every claim, and it's essential to be aware of what's not included.
This type of coverage doesn't cover claims that arise from intentional acts, such as deliberate mistakes or omissions.
Getting Started with Professional Liability Insurance
Professional liability insurance is a crucial coverage for Michigan businesses, especially those in industries prone to lawsuits. It protects against claims of professional liabilities that general liability insurance typically won't cover.

To get started with professional liability insurance, you'll need to consider your industry and risks, as well as your business operations. This will help determine the level of coverage you need.
You may need to purchase professional liability insurance, or you may also need to purchase malpractice insurance, which covers two separate types of claims. The cost of professional liability insurance varies, but on average, it's around $59 per month in Michigan.
As you explore your options, keep in mind that factors such as your industry, business operations, number of employees, policy limits, and deductibles can all affect the cost of your insurance. It's essential to choose a policy that fits your business needs and budget.
Here are some key types of professional liability insurance to consider:
- Professional liability insurance: protects against claims of professional liabilities
- Malpractice insurance: covers two separate types of claims, often required for businesses with high-risk professions
- Employment practices liability insurance (EPLI): protects against lawsuit expenses related to claims of harassment, discrimination, and wrongful termination
By understanding your options and choosing the right policy, you can ensure your business is protected against professional liabilities and lawsuits.
Cost and Benefits
The cost of professional liability insurance in Michigan can vary, but the average monthly cost is $59, which is lower than the national average of $66. This cost is influenced by various factors, such as your business type and location.

Your business size and location play a significant role in determining your insurance rates. For instance, professionals in different cities like Detroit, Lansing, and Grand Rapids may have different rates.
The cost of professional liability coverage also depends on your coverage limits, deductible, business operations, and claims history. This means that your individual circumstances can impact your insurance premiums.
Here are some factors that affect the cost of professional liability insurance in Michigan:
- Your type of business, industry, and similar risk factors
- Coverage limits and deductible
- Your business size and location
- Business operations
- Your claims history
Industry-Specific Information
If you work in a specific hospital or healthcare facility in Michigan, you may need malpractice insurance to be employed. Michigan state law does not require medical professionals to carry this coverage.
Architects and engineers working on state or government projects in Michigan are typically required to carry an E&O policy. For example, architects working with the Michigan State Housing Development Authority (MSHDA) must carry errors and omissions coverage equal to either $1 million or 10% of the construction contract amount, whichever is the greater number.
While it's not required by law in Michigan, it's considered a best practice for lawyers to carry legal malpractice insurance, and it's also required to participate in the State Bar of Michigan's Lawyer Referral Service.
Healthcare

If you're a healthcare professional, you might be wondering about the need for medical malpractice insurance in Michigan. Michigan state law does not require medical professionals to carry this coverage.
You may, however, need malpractice insurance to work in a specific hospital or other healthcare facility. This requirement can vary depending on the facility and the specific job you're applying for.
Healthcare professionals, including doctors and therapists, are often required to have medical malpractice insurance to practice in certain settings. This insurance protects them from financial losses in case of a medical mistake or error.
Architects and engineers working on state or government projects in Michigan, on the other hand, are typically required to carry an E&O policy. This is a different type of insurance that protects them from errors and omissions in their work.
Attorneys
As an attorney, it's essential to have professional liability insurance, also known as legal malpractice insurance, to protect yourself and your clients.

In Michigan, it's not required by law, but it's considered a best practice to participate in the State Bar of Michigan's Lawyer Referral Service.
General liability insurance doesn't include professional liability coverage, so you'll need to purchase a separate policy for this type of protection.
Professional liability insurance can help safeguard your reputation and financial well-being in case of a mistake or error in your practice.
Frequently Asked Questions
How much is $1,000,000 liability insurance a month?
A $1 million liability insurance policy typically costs around $69 per month. However, costs may vary depending on your business's specific needs and circumstances.
How much does general liability insurance cost in Michigan?
In Michigan, general liability insurance costs typically range from $500 to $2,000 per year. The actual cost may vary depending on your business's industry, region, and claims history.
Sources
- https://www.insureon.com/small-business-insurance/professional-liability/michigan
- https://www.nextinsurance.com/professional-liability-insurance/michigan/
- https://insurancenetworkagency.com/insurance-services/professional-liability-insurance-michigan/
- https://www.insureon.com/states/michigan-business-insurance
- https://proassurance.com/michigan
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