Professional Liability and E&O Insurance

Professional liability insurance helps protect a business from covered claims alleging that an error, omission, negligent act, misleading statement, or failure in its professional services caused a client financial harm. It may help with qualifying defense costs, settlements, and judgments.

The terms are frequently used interchangeably. “Professional liability” is common for licensed and advisory professions, while “errors and omissions” is often used for consultants, technology providers, agencies, and other service businesses. Actual policy forms and coverage differ by occupation.

Professional liability addresses covered financial harm arising from professional services, advice, or errors. General liability insurance commonly addresses covered bodily injury, physical property damage, and certain personal or advertising injuries. Many service businesses need both.

A claims-made policy generally requires a claim to be made—and sometimes reported—while the policy is active or during an applicable extended reporting period. The professional service must also satisfy the policy’s retroactive-date, prior-knowledge, and other coverage requirements.

The retroactive date generally establishes the earliest date on which a covered professional act may have occurred for a claims-made policy to respond. Services performed before that date are typically excluded. Maintaining the date when replacing coverage can be important.

An extended reporting period, sometimes called tail coverage, may provide additional time to report qualifying claims involving professional services performed before claims-made coverage ended. It generally does not insure services performed after the policy termination date.

A professional liability policy may help pay covered attorney fees, investigation expenses, and court costs. Defense costs may be included within the liability limit, which means those expenses can reduce the amount available for a settlement or judgment.

Consultants, advisors, technology providers, designers, agencies, bookkeepers, tax preparers, project managers, real estate professionals, and other businesses providing specialized services may need coverage. Some licenses and client contracts may also require it.

Consider your services, annual revenue, maximum contract value, client industries, possible financial harm, defense costs, contractual requirements, and aggregate exposure. Confirm whether defense expenses reduce the policy limit when comparing available options.

Compare the definition of professional services, retroactive date, prior-acts coverage, reporting requirements, limits, defense-cost treatment, deductible, consent-to-settle language, extended reporting options, endorsements, and exclusions. Start on the Compare Quotes page or use the Get a Quote page.