If clients pay you for advice, expertise or professional services, a mistake, missed deadline or misunderstanding can lead to a costly claim. Professional liability insurance, also called errors and omissions (E&O) insurance, protects you against those claims and pays for your legal defense.
What professional liability covers
- Negligence: errors, omissions or mistakes in your work.
- Misrepresentation: claims that you gave inaccurate advice.
- Missed deadlines: delays that cost a client money.
- Failure to deliver: work that did not meet agreed standards.
- Legal defense costs: attorney fees, settlements and judgments up to your limits.
What it does not cover
Bodily injury and property damage are covered by general liability insurance. Employee injuries require workers’ compensation. Intentional wrongdoing, fraud and criminal acts are excluded.
Who needs professional liability insurance?
Consultants, accountants and bookkeepers, marketing and design agencies, IT and software professionals, real estate professionals, architects and engineers, personal trainers, photographers, coaches and many other service providers. Some licensed professions and many client contracts require it.
Claims-made coverage explained
Most professional liability policies are written on a claims-made basis: they cover claims made while the policy is active, for work performed after a retroactive date. Keeping continuous coverage, and considering tail coverage when you close a business, helps avoid gaps.
What affects the cost
Your profession, revenue, client types, contract sizes, years of experience, claims history and the limits and deductible you select. Higher-risk professions and larger contracts usually mean higher premiums.
Protect your services and your reputation
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Frequently asked questions
Is professional liability the same as E&O?
Yes. Errors and omissions insurance is another name for professional liability insurance.
Do I need both general and professional liability?
Many service businesses do, because general liability covers physical injuries and property damage while professional liability covers financial losses from your work.
Does professional liability cover past work?
Claims-made policies cover work performed after the policy’s retroactive date, as long as the claim is made while the policy is active.
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This page is for general information only and is not insurance, legal or tax advice. Requirements, coverage and prices vary by state, industry and insurer. Review policy documents and speak with a licensed agent before buying.