Professional Liability Insurance
Errors & omissions coverage for professionals providing advice or services.
Typical cost: $500 – $5,000+ per year
What Is Professional Liability Insurance?
Professional Liability Insurance, also known as Errors and Omissions (E&O) insurance, protects businesses and individuals who provide professional services or advice. It covers claims that your work was negligent, contained errors, or failed to deliver promised results—even if you did nothing wrong.
Who Needs It
Any business providing professional services or advice needs E&O coverage: consultants, accountants, attorneys, architects, engineers, real estate agents, insurance agents, IT professionals, marketing agencies, and healthcare providers. Many clients require it before signing contracts.
Claims-Made Coverage
Most E&O policies are "claims-made," meaning they cover claims made during the policy period regardless of when the incident occurred (subject to a retroactive date). This differs from occurrence policies that cover incidents during the policy period regardless of when claims are made.
What's covered
Professional Negligence
Covers claims that your professional services fell below the expected standard of care.
Errors and Omissions
Protects against claims of mistakes, oversights, or failure to perform services.
Breach of Contract
Covers allegations that you failed to deliver services as promised.
Misrepresentation
Protects against claims of inaccurate statements or advice.
Legal Defense
Pays attorney fees and court costs to defend against covered claims.
Regulatory Defense
Some policies cover defense costs for licensing board investigations.
Pros and cons
Advantages
- Protects against claims general liability won't cover
- Essential for service-based and consulting businesses
- Covers legal defense even for groundless claims
- Often required by clients and contracts
- Protects your professional reputation
- Available for individuals and businesses
Considerations
- Claims-made policies require continuous coverage
- Retroactive date limits how far back coverage extends
- High-risk professions pay significantly higher premiums
- Intentional acts and fraud excluded
- Bodily injury claims not covered (need GL)
- Policy limits can be exhausted by defense costs
Frequently asked questions
Related coverage
Bundled coverage combining general liability and commercial property insurance.
Core business protection against third-party bodily injury and property damage claims.
Coverage for businesses that manufacture, distribute, or sell products.
Required coverage for employee work-related injuries and illnesses.
Vehicle coverage for business-owned cars, trucks, and fleets.
Protection against data breaches, cyberattacks, and digital liability.
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