What is Professional Liability (Errors and Omissions)?
Professional liability insurance, often called Errors and Omissions (E&O), protects service providers against claims arising from mistakes, missed deadlines, negligent advice, or inadequate performance. It covers defense costs and settlements for allegations of professional negligence or failure to deliver promised services. For an overview of how this fits within broader liability programs, see What is Liability - Professional?.
Who needs it
Businesses and individuals who provide professional services or advice typically seek E&O coverage: consultants, designers, IT firms, real estate professionals, and some contractors. Clubs, associations, event organizers, retailers, and small operators may also carry related coverages like event liability or participant accident coverage when they offer programs or services that expose them to claims.
What it typically covers
Typical E&O policies respond to claims that allege an error, omission, or negligent act in performing professional duties. Coverage examples include legal defense for a consultant accused of faulty advice, or settlement costs when a contractor’s design causes a client financial loss. Related coverages or exposures sometimes included in package programs are commercial liability, equipment coverage, and limited commercial auto exposure when business vehicles are used to deliver services. For policy specifics, many businesses read detailed product pages such as Errors and Omissions (E&O) Insurance to compare options.
Common exclusions or limitations
Exclusions commonly found in E&O policies include intentional wrongdoing, criminal acts, bodily injury or property damage that are covered under general liability, and claims arising from known prior acts. Contractual liability limits may apply where damages are defined by a contract rather than negligence. Understanding underwriting factors and the policy’s declarations page helps identify gaps and coordination with other coverages.
Factors that influence cost
Premiums are influenced by the type of services offered, annual revenues, claims history, staff qualifications, and the size and complexity of contracts. High-risk operations, such as those exposed to transportation risks or heavy equipment use, can increase rates. Risk management considerations—like documented quality controls, professional certifications, and contract wording—can lower premiums over time.
Proof of insurance & compliance
Clients, landlords, and event venues often require a certificate of insurance naming them as an additional insured or demonstrating limits of liability. A certificate shows coverage but not policy terms; review the policy for exclusions and endorsements. Small organizations that run events should consider participant accident coverage and event liability to address spectator injury exposures.
How to get a quote
Gather basic information—business description, gross receipts, list of services, prior claims, and any contractual requirements—and request quotes from insurers or brokers. If you need guidance, talk to your agent who can advise on appropriate limits, deductible options, and whether endorsements for miscellaneous exposures such as subcontractor oversight or claims management are advisable. You may also find specialized program pages like Miscellaneous Errors and Omissions (E&O) Liability helpful when your services fall outside standard categories.
Risk scenario: a client claims lost revenue after following professional advice that allegedly contained an error; E&O may respond to defense and settlement costs, subject to policy terms.
Frequently Asked Questions
What’s the difference between general liability and E&O?
General liability covers bodily injury and property damage from business operations, while E&O covers financial losses from alleged professional mistakes or omissions.
Do I need E&O if I have a business owner’s policy (BOP)?
Many BOPs do not include professional liability. If your business provides advice or professional services, a separate E&O policy is often needed.
Will E&O cover claims from subcontractors or vendors?
Coverage depends on policy language and endorsements. Some policies exclude subcontractor acts unless specifically endorsed; review your policy and discuss gaps with your agent.
Still have questions? Talk to a local insurance expert.