Mandatory Professional Liability Insurance (Errors & Omissions) Requirements by Profession: A State-by-State Overview

Professional Liability Insurance (Errors & Omissions — E&O) sits at the intersection of licensing, contracting and risk management. For many regulated professions in the United States, E&O is not optional — it’s a licensing or contracting requirement that affects business continuity, regulatory compliance, and the ability to win public and private work. This state-by-state overview explains how mandates typically work, which professions are most often affected, sample cost ranges by location and carrier, and practical compliance steps for licensed professionals in the USA.

Why states require E&O (and what “mandatory” looks like)

States and government contracting authorities require E&O to:

• Protect consumers who may suffer financial loss from negligent professional advice or services.
• Protect public funds on state or municipal contracts (common for architects, engineers, surveyors).
• Demonstrate minimum financial responsibility for licensed professionals (insurance brokers, mortgage brokers, CPAs, real estate licensees in some jurisdictions).

“Mandatory” can mean different things:

• An explicit state licensing statute or board rule that requires each licensee to carry a minimum E&O policy.
• A requirement imposed as part of public contracting or procurement (state agencies requiring proof of coverage to bid or perform).
• Brokerages or municipal licensing authorities requiring firm-level coverage that protects licensees.

For guidance on how claims interact with licensing boards and reporting duties, see: How Claims Under Professional Liability Insurance (Errors & Omissions) Can Affect Your License. Also review your reporting duties at: Reporting Obligations: When to Notify Licensing Boards About Professional Liability Insurance (Errors & Omissions) Claims.

Professions most commonly subject to state-level E&O mandates

States rarely use a one-size-fits-all statute. Instead, mandates tend to focus on high-liability professions or contracting contexts. Common professions and mandate patterns:

• Architects & Engineers (A/E)

  • Frequently required for public bidding and state contracts, and sometimes for licensure renewal by state boards.
  • Example: Many state procurement codes demand proof of professional liability for public construction/design contracts.

• Real Estate Licensees (E&O for real estate agents & brokers)

  • Some states or local REALTOR® associations require E&O for practicing real estate licensees or for brokers who supervise transactions; others leave it voluntary.
  • Broker-level firm E&O is more commonly required than individual agent coverage.

• Insurance Agents & Brokers

  • Many states require errors & omissions or fidelity bonds tied to surety/producer licensing or for certain products (e.g., title insurance or surplus lines).

• Mortgage Brokers / Loan Originators

  • Often required by state mortgage licensing authorities to carry E&O or surety bonds, especially for consumer protection.

• CPAs, Tax Preparers & Financial Advisors

  • Some states, regulatory boards or large clients require proof of E&O (commonly for attest or advisory services).

• Attorneys

  • Attorneys generally face malpractice insurance as voluntary, but certain government-appointed counsel or vendors may be required to show coverage.

• Healthcare-related professionals (telehealth providers, mental health counselors)

  • Clinical malpractice differs from E&O, but behavioral health and telehealth vendors providing non-clinical professional services may be subject to E&O requirements.

For an industry-focused look at navigating mandates, see: Navigating Mandatory E&O Requirements in Regulated Professions.

State-by-state approach — what to look for

Rather than listing every statute for all 50 states (procurement codes and board rules change frequently), use this framework to evaluate each state:

• Licensing board rules — check the specific professional board (e.g., State Board of Architecture & Engineering; Department of Real Estate).
• State procurement and public works codes — many states require E&O for A/E firms bidding on state projects.
• Municipal or county requirements — local governments sometimes add coverage requirements for vendors or professionals.
• Industry associations — some states’ REALTOR® associations or trade groups maintain group or mandatory E&O plans.

Below is a concise comparison of common professions, the typical states where mandates are frequently observed (examples), and typical minimum limits you’ll see.

Note: table shows common examples and ranges — confirm with your state board or legal counsel for the exact requirement in your jurisdiction.

Sample state snapshots (practical examples)

• California (Los Angeles, Sacramento)
  • Public contracts for A/E firms typically require professional liability proof. Mortgage and insurance producers adhere to Department of Real Estate and Department of Insurance guidelines. Firms bidding on state projects should expect 1M/2M minimums.
• New York (New York City, Albany)
  • A/E firms and some financial services vendors are regularly required to show E&O for public contracts; many municipal procurements require proof of coverage.
• Texas (Houston, Austin)
  • Similar procurement practices for A/E; licensing boards can require proof or declarations as part of renewal or contracting.
• Florida (Miami, Tallahassee)
  • Multiple regulated professions have procurement-driven E&O demands; real estate brokers may impose E&O requirements internally or via association membership.
• Illinois & Massachusetts
  • State procurement and licensing boards impose coverage conditions for a range of professions — especially A/E and consultants on public projects.

Always confirm locally: state procurement specifications or board rules will define required limits and acceptable policy terms (claims-made vs occurrence, retroactive date, extended reporting period).

Typical premiums & sample carriers (USA-wide sample pricing)

E&O premiums vary by profession, revenue, claims history, and state. Below are conservative market ranges and sample carriers. Rates reflect 2024 market observations for small firms/solo practitioners.

• Typical small business E&O (consultants, IT, small advisors): $500–$2,500/year for $1M per claim / $1M aggregate.
• Real estate agent E&O: $300–$1,200/year (many factors).
• Architects/Engineers (small firm): $3,000–$15,000+/year depending on exposure and project work.

Sample carriers and advertised information:

• Hiscox — small business E&O with quick online quotes; small firms can see policies starting in the low hundreds annually depending on limits and exposures. (Hiscox: https://www.hiscox.com/small-business-insurance/errors-omissions)
• The Hartford — offers E&O for a range of professions; they provide tailored quotes and industry-specific underwriting. (The Hartford: https://www.thehartford.com/errors-omissions-insurance)
• Chubb / Travelers / CNA — large commercial carriers often used by mid-size to large firms; premiums generally higher but include broader policy forms and higher limits.

Example cost table (approximate; illustrative only):

Cite for pricing guidance: Hiscox small business E&O and The Hartford E&O pages above.

Practical compliance checklist (state-focused)

• Check your specific state licensing board and procurement codes before assuming coverage requirements.
• Confirm whether a state requires E&O for licensure, contract bidding, or only for specific engagements.
• Verify policy terms required by the state or client (retroactive date, extended reporting, waived subrogation).
• Keep certificates of insurance current and on-file for licensing renewals or bids.
• Notify your insurer if you obtain a contract that adds increased exposure — many policies require prior notification for large public contracts.

For step-by-step compliance items, see: A Checklist for Maintaining Compliance With Professional Liability Insurance (Errors & Omissions) Mandates. If you face a claim or disciplinary matter tied to E&O, consult: How to Handle Disciplinary Proceedings That Stem From E&O Claims.

Final recommendations (for U.S. professionals)

• Start with the exact licensing board and procurement language in your state and municipality — requirements can differ across counties and agencies.
• Get multiple market quotes (Hiscox, The Hartford, Chubb/Travelers, plus local brokers) and confirm that the policy form meets the board/contract terms.
• Budget realistically: small practitioners should expect several hundred to a few thousand dollars per year; A/E and firms with public contract exposure should budget several thousand to tens of thousands.
• Maintain strong risk management and claims prevention — insurers price history and controls into renewal terms.

Authoritative references and further reading

• Hiscox — Errors & Omissions Insurance for small business: https://www.hiscox.com/small-business-insurance/errors-omissions
• The Hartford — Professional Liability (E&O) Insurance overview: https://www.thehartford.com/errors-omissions-insurance
• State procurement and licensing pages (search specific state board or procurement site for contract and licensure language)

Note: This article provides a practical overview for U.S. professionals. Always confirm current state statutes, board rules and contract language before relying on insurance coverage for regulatory compliance.