Professional liability insurance, also known as professional indemnity insurance, is a type of liability insurance that provides cover for individuals and companies against any legal costs and damages awards, associated with negligence claims and civil lawsuits.   

This type of liability insurance is sometimes required by law, especially in the medical and legal professions.  In the medical world, professional liability insurance is known as medical malpractice insurance. 

Consultants, brokers and lawyers purchase coverage in the form of errors and omissions insurance, or E&O.  Many businesses that benefit from the advice or services of professional individuals and companies also require professional liability insurance under contract.  Others that typically purchase this type of liability policy include financial and accounting firms, maintenance and construction workers, and transport companies.  Some non-profit organisations and charities also hold this type of policy.  

Professional liability insurance coverage focuses mainly on any alleged failure to perform in a professional capacity by the policyholder, any kind of error or omission in the services provided by the policyholder, and any financial loss caused by the policyholder.  Sometimes legal defence costs are covered as well, particularly when legal actions turn out to be without merit.  Legal claims covered under this type of policy are typically not covered by other types of liability policies.  Common types of claims include negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice.  Coverage does not extend to include criminal prosecution, and only the forms of legal liability enumerated in the policy are included in the coverage.