Professional liability insurance, also called errors and omissions (E&O) insurance, helps protect companies that provide professional services when a mistake or a failure to perform causes financial harm to a client.
What is Professional Liability Insurance?
Professional liability insurance covers claims arising from errors, omissions, negligence, inaccurate advice, misrepresentation, or breaches of good faith in the course of providing professional services.
While it typically does not cover criminal acts or intentional civil law violations, a policy can pay for your legal defense costs and related damages if a client sues.
What Businesses Need Professional Liability Insurance?
Some professions are commonly required to carry this coverage, and many service providers choose it because mistakes can have significant financial consequences. For an overview of common policy options, see Professional Liability (Errors & Omissions).
- Technology – Software or hardware failures can disrupt a client’s business and lead to major loss.
- Legal – Lawyers, paralegals, and court reporters face exposure from inaccurate advice or misrepresentation.
- Real estate – Contractors, home inspectors, and agents can be liable for negligent work or missed defects.
- Travel – Booking errors and missed arrangements can create client losses that trigger claims.
- Advertising – Misleading claims or campaign errors can cost clients money and damage reputations.
- Accounting or bookkeeping – Clerical errors or outdated financial guidance can lead to large client losses.
- Photographers – No-shows or accidental damage to images can result in financial claims.
- Consultants – Faulty recommendations or implementation failures can expose consultants to liability.
When Should you Purchase Professional Liability Insurance?
Buy professional liability insurance before you need it—most policies do not cover claims for incidents that occurred before the policy’s effective date unless a retroactive date is included.
What Does Professional Liability Insurance Cost?
Premiums vary by industry, location, chosen coverage limits, and your claims history. To get an accurate quote, share relevant materials with your agent, such as contracts, documentation procedures, quality-control processes, employee training, and information about prior coverage.
For more information about coverage specifics and policy options for firms, review Firms Professional Liability (E&O) and general E&O topics at Errors and Omissions (E&O) Insurance.
Next steps
Schedule an appointment with your insurance agent to compare policy limits, exclusions, and endorsements that matter to your business.
If you want a simple way to begin, discuss with an agent who can help tailor coverage to your risks and provide a quote.
Frequently Asked Questions
Who typically needs E&O coverage?
Any business that provides advice, professional services, or specialized work to clients can benefit from E&O coverage to protect against claims of negligence or mistakes.
Does professional liability cover intentional wrongdoing?
No, most policies exclude intentional illegal acts and criminal conduct; they are designed to cover negligent errors and omissions.
Will this insurance pay my legal defense costs?
Yes—one of the primary benefits is payment of defense costs and settlements or judgments subject to the policy’s terms and limits.
Can I get coverage for past work?
Some policies offer retroactive coverage, but you must arrange this before a claim arises and confirm any applicable retroactive date with the insurer.