Professional Liability Insurance (E&O)
Also called errors and omissions. It responds to the claim that your work, your advice or your judgement cost a client money, which is the exact thing general liability leaves out.
This page is general information, not insurance advice, and it does not change any policy. Coverage varies by carrier, policy form, and state. See our disclaimer.
What professional liability is generally intended to cover
A mistake in the work
Generally intended to respond when a client alleges an error, an omission or a failure to deliver caused them financial loss.
Bad advice
Recommendations, designs and opinions a client relied on and says they were wrong. This is the heart of the coverage.
Missed deadlines and filings
A date that went past unnoticed, a filing that did not go in, or a step that got skipped.
The cost of defending it
Legal defence is usually the largest cost in a professional claim, and it is generally paid even when the allegation turns out to be groundless. Note that defence costs commonly erode the limit rather than sitting on top of it.
Claims from work already done
Most policies are written claims-made, so they respond to claims brought while the policy is live, including for work done earlier, back to the retroactive date.
What it does not cover
This one is about your work product. Physical accidents and property belong elsewhere.
Somebody getting physically hurt
A client tripping in your office is bodily injury, which is general liability territory.
general liability→Damage to physical property
Breaking something belonging to a client is property damage, not a professional error.
general liability→Your employees getting hurt
Employee injury is workers’ compensation, whatever the profession.
workers’ compensation→A data breach
Losing client data is a cyber exposure. Some professional policies bolt on a little cyber, but rarely enough to rely on.
cyber liability→Your own equipment and premises
Damage to what you own is property coverage, usually bought as part of a package.
business owner’s policy→Who is going to ask you for it
Professional liability is almost always driven by contract or by a licensing body rather than by statute.
- A corporate client before signing a services agreement, often at a specified limit
- A state licensing board, for professions where it is a condition of the licence
- A public body or municipality before awarding a contract
- A platform or marketplace before letting you take on work through it
- An investor or lender doing diligence on a services business
A contract asking for E&O?
Tell us what your business does and we will point you at the right market for it.
Get a quoteWhat drives the price
Professional liability is rated on the size of the mistake you could plausibly make, more than on how careful you are.
Your profession
The single biggest factor. Some professions carry far more exposure to large financial loss than others, and carriers price accordingly.
Revenue
A proxy for how many clients you serve and how large their projects are.
The size of the projects you take on
One large engagement can create more exposure than many small ones, so carriers ask about your largest client and your largest project.
Claim history
Prior claims and circumstances you have reported both count, and on a claims-made form you are asked about anything that might yet become a claim.
Limits and deductible
Higher limits cost more, and defence costs commonly erode the limit rather than sitting outside it, which is worth checking on any quote.
Your retroactive date
How far back the policy will reach. Longer prior coverage means more years of past work exposed, and it costs accordingly.
Frequently asked questions
What is the difference between professional liability and general liability?
General liability responds to physical harm: somebody injured, or property damaged. Professional liability responds to financial harm caused by your work or advice. A client tripping in your office is general liability. That same client saying your report cost them money is professional liability. Most service businesses need both.
Is E&O the same thing as professional liability?
In everyday use, yes. Errors and omissions is the more common name in some industries, professional liability in others, and malpractice in medical and legal contexts. The policies do the same job.
What does claims-made mean?
A claims-made policy responds to claims that are made and reported while the policy is in force, rather than to when the work was done. That is why continuous coverage matters so much: a gap can leave past work unprotected even though it was insured at the time.
What is a retroactive date?
The date your claims-made coverage first started and has run unbroken since. Work performed before it is generally not covered. Keeping that date when you change carriers is one of the most important things to get right at renewal.
What happens if I close the business or let the policy lapse?
Because the policy is claims-made, a claim brought after it ends generally is not covered. An extended reporting period, often called tail coverage, buys time to report claims from work already done. It is usually bought once, at the end.
Do I need it if I have never had a complaint?
Most professional claims come from clients who were happy until a project went wrong or a result disappointed them. The coverage also pays defence costs, which are incurred whether or not the allegation has merit, and those are frequently the larger number.
How much does professional liability cost?
It depends on the profession, revenue, the size of your engagements, your claim history and the limits chosen, so there is no single figure. Request a quote for your own situation.
Other coverages: general liability, workers’ compensation, cyber liability, business owner’s policy.
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