Professional liability insurance, also called errors and omissions or E&O, covers claims that your professional work caused a client financial loss. It is almost always written on a claims-made basis, which means the date on the policy matters as much as the cover on it.
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Professional liability is a claims-made policy with two coverages that appear on almost every form. Knowing how each one works is the difference between a policy that answers and a policy that argues.
Claims alleging your work product was flawed, your advice was wrong, or your service did not meet the professional standard. Defense is included rather than bought separately.
Lawyers, court costs, expert witnesses, and the settlement or judgment at the end. Whether defense sits inside or outside the limit is the single most consequential line on the schedule, and it is rarely the line anyone reads.
Defense and damages when a client alleges your work fell below professional standards. An accounting firm misses a tax filing deadline and the client incurs penalties.
Mistakes in deliverables, missed deadlines, failure to deliver contracted services. A software developer ships code with critical bugs that cause client data loss.
Legal fees, court costs and expert witnesses, including for claims that ultimately go nowhere. A client sues over advice that did not produce the result they expected.
Court-ordered damages or a negotiated settlement. A marketing agency's campaign strategy leads to measurable client losses.
Professional statements that damage a client's reputation. A consultant's published analysis contains inaccurate claims about a competitor.
An E&O form answers for the work. It does not answer for the premises, which is why a practice usually carries this beside the policy that answers for physical harm, and a technology business usually needs a third for the database as well as the build. Our brokers place them together rather than leaving the seams between them for a claim to find, alongside cover for management decisions where the board is exposed as well as the practice.
Who is buying
Any business that provides advice, services or deliverables to clients carries this exposure. What changes is what a claim looks like, and what the contract or the licensing board demands on top.
Missed deadlines, software bugs, integration failures. Technology E&O is routinely required by enterprise clients before a contract is signed.
Real estate agents, management consultants and HR firms, graphic and brand designers, healthcare professionals, and staffing firms and recruiters all carry it too. Disclosure failures, hiring advice that leads to a lawsuit, deliverable and copyright disputes, clinical errors depending on specialty and state, and negligent placement claims are the same policy answering a different question. Even where E&O is not legally required in your state, most enterprise contracts require it.
The policy responds to financial loss your professional work caused. It does not respond to physical harm, and it does not respond to an incident unless the incident was the work. That distinction is the one service businesses get wrong when they assume a single policy is enough.
Four claims, and which policy each one actually belongs to:
Covered: Your advice was wrong and the client can show what it cost them. Negligence in professional work, and defense comes with it.
Not covered: A consultant spills coffee on a client's laptop. That is property damage and it belongs to general liability.
Covered: A deliverable was late or defective and the client suffered a measurable loss. Errors and omissions.
Not covered: Somebody exfiltrates your client list. That is a cyber claim, not a professional services failure.
The timing matters as much as the trigger, and on a claims-made policy it matters more than on any other form. A claim made today about work done three years ago turns on a single date on your schedule. That is also why a technology business usually needs cover for a data breach sitting alongside this one rather than instead of it.
The gaps
These exposures need separate policies, and assuming otherwise is how a service business ends up carrying three policies and still uninsured for the thing that happens. Eight that matter on an E&O schedule.
WHAT YOU NEED
General liability. Physical harm is a different policy entirely, and the two are bought together for a reason.
WHAT YOU NEED
Workers compensation. Your own staff are not clients, and the policy only answers to clients.
WHAT YOU NEED
Cyber liability. A breach is not a professional services failure, even when it happens to a technology business.
WHAT YOU NEED
Uninsurable everywhere, and deliberately so. A policy that paid for deliberate harm would be an incentive rather than a protection.
WHAT YOU NEED
Prior acts cover, negotiated at placement. Without it, work done before that date has no policy behind it at all.
WHAT YOU NEED
An extended reporting period, bought before you cancel. Once the policy is gone the option usually goes with it.
WHAT YOU NEED
The contract read before you sign it. A clause promising more than the form gives is a promise you are carrying yourself.
WHAT YOU NEED
Directors and officers cover. Running the company is not the same as serving a client, and the claimants are different people.
The retroactive date and the defense cost structure decide whether a claims-made policy answers or argues, and both are legible at quote stage to anyone who knows to look. Have them checked. If you hold client records, have cover for a data breach checked in the same sitting, since the two claims arrive from the same incident more often than firms expect.
Policy mechanics
Almost every professional liability policy is written on a claims-made basis, and almost every buyer treats it like an occurrence policy. The difference is not academic. It is three concepts, and each one has ended a claim.
The earliest date of work the policy will cover. If the error happened before it, the claim is not covered even though the claim arrived while you were insured and paying. Move carrier without carrying the date forward and you can wipe out years of cover on the day you sign.
Some policies pay defense from inside the limit and erode it as they go. Others pay defense on top of it. On a $1M policy, a substantial defense bill under the first structure comes straight out of the money available to settle with. Under the second it does not. Two policies at the same limit and the same price are not the same policy.
Cancel or fail to renew a claims-made policy and you lose cover for claims filed after cancellation, including for work done while you were insured. Tail cover buys that window back, and it is bought at the end rather than found there.
The point is not to alarm anybody. It is that a claims-made form carries obligations an occurrence form does not, and every one of them has to be settled before a claim rather than during one. Retroactive date, defense structure, exclusion language, sub-limits: we read all four on every quote, along with what your contract asks the certificate to say, which comes from your engagement terms rather than a standard form.
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Each line below changes what an E&O form has to carry or has to say. Nothing here is priced and nothing here is a quote. It shows which parts of the schedule your placement has to negotiate.
What the schedule has to say
Tick what applies and the wording it implies appears here.
Every line ticked here is a question for your renewal, and on a claims-made form the answer has a date attached to it as well as a yes or a no.
Speak to our teamCost
Six factors move an E&O premium more than the rest. Any figure quoted without seeing your work and your contracts is a guess dressed up as a price, which is why there is not one on this page.
Technology and financial services typically price above marketing or general consulting, because the claim sizes behave differently and the defendants are chosen differently.
Prior claims raise a premium significantly. A clean history is one of the few inputs on this list you already own outright.
Higher revenue generally means more engagements, larger ones, and more exposure sitting behind each of them.
More people producing deliverables means more chances for one of them to be wrong, and underwriters count the professionals rather than the payroll.
$1M/$1M is a common contract starting point. Higher limits and lower deductibles both cost more, and the defense structure underneath them changes what the limit is actually worth.
The regulatory environment and local litigation trends vary, and so does the cost of defending a claim in them.
Three marks marks an input that carries more weight in an E&O rating than the others listed. The scale is comparative only. It is not a rate and it is not a quote.
A low-risk consultancy and a financial advisory firm are not in the same conversation, which is exactly why a single figure on a page is useless to either of them. The more useful comparison is not between two premiums but between two forms: the retroactive date, whether defense sits inside or outside the limit, and what the exclusions actually say.
Talk to an expertProcess
We understand your business first, then take it to the carriers who want to write it. An advisor walks you through the options and what they cost. No two files are the same, so what follows is the shape of a placement rather than a script.
What you do, for whom, and what your contracts oblige you to carry. On a claims-made policy we also want your current retroactive date, because it decides how much of your back catalogue any new policy will answer for.
One set of information goes to admitted and E&S underwriters with genuine appetite for your profession. When quotes come back our brokers read the retroactive dates, the defense cost structure, the exclusion language and the sub-limits side by side, and flag the differences in plain English.
An enterprise client wants proof before the engagement starts, and this is how COIs get issued here. We read the certificate request against your contract so it asks the carrier for the wording that contract needs rather than a generic form that usually fails review.
Nothing. They are two names for the same cover, along with professional indemnity. Which one appears on your contract usually depends on the industry rather than on the policy.
The policy responds to claims MADE while it is in force, rather than to incidents that happen while it is in force. That is why the retroactive date and the reporting period matter as much as the limit does.
The earliest date of work the policy will cover. Work done before it sits outside the policy even if the claim arrives while you are insured. It is the first thing to check when you change carrier.
You lose cover for claims filed after cancellation, including for work done while you were insured. An extended reporting period, or tail cover, buys that window back and has to be arranged before the policy ends.
It depends on the form. Some erode the limit as they are spent and some sit on top of it. Two policies at the same limit can leave very different amounts available to settle with, so it is worth knowing which one you have before you need it.
Usually yes. General liability covers physical harm and property damage. Professional liability covers financial loss caused by your work. A consultant who damages a client's laptop is a GL claim; a consultant whose advice loses the client money is not.
Rarely by statute, though some professions need it for licensure. In practice it is required by contract: most enterprise clients will not engage without it, at a stated limit.
No. That is cyber liability. The confusion is common in technology businesses, which frequently need both, because a defective build and a breached database are different claims with different claimants.
Get started
Whether you need errors and omissions for a new contract requirement or you are replacing a carrier that is not performing, we can move. We will tell you what your retroactive date is and whether your defense costs sit inside the limit, which is more than most placements come with.
