Commercial Risk Management
Professional Liability Insurance
If your business provides advice, expertise, or a service, you need protection against claims of negligence.
What Is Professional Liability Coverage?
Professional liability, also called Errors & Omissions (E&O), responds to claims that your professional services caused a client financial harm due to a mistake, oversight, or failure to perform as expected. Unlike general liability, which responds to physical injury and property damage, professional liability responds to the less tangible but equally damaging claims: the accountant whose advice led to a tax penalty, the IT consultant whose system failed and disrupted a client's operations, the contractor who missed a specification and the client lost a contract as a result. In professional services, your reputation and your balance sheet are both on the line.
This is typically a claims-made policy form, meaning coverage is triggered when the claim is filed, not when the alleged error occurred. That distinction matters enormously for businesses switching carriers or closing down. A retroactive date protects you for prior work; tail coverage (extended reporting period) protects you after a policy expires. If you don't understand these mechanics, you can find yourself with a gap in coverage even though you've been insured continuously.
Most service-based businesses don't think they're at risk until a client threatens to sue. By that point, it's too late to buy coverage. Our advisors are available to review your contracts, your scope of services, and your carrier options to make sure you're protected from day one, with the right retroactive date and the right limits for your client base.
Key Facts
-
Claims-made policy form: coverage triggers when the claim is filed
-
Retroactive date protects you for work done before the policy was issued
-
Tail (ERP) coverage is available when a policy is canceled or not renewed
-
Defense costs typically included within limits and erode the policy
-
Responds to financial harm to clients, not bodily injury or property damage
-
Most professional service contracts now require proof of E&O coverage
Negligence in Professional Services
If a client claims your work fell below the professional standard of care and caused them a financial loss, this is the core coverage that responds. It's your primary line of defense.
Errors and Omissions in Deliverables
Whether it's a report, a design, a software build, or a strategic plan, mistakes in the work product itself are covered. A missing detail or incorrect output that costs a client money is exactly what this policy is for.
Failure to Deliver Promised Results
If you contracted to achieve a specific outcome and didn't, a claim may follow. E&O coverage can respond even when there's no single clear error, only an unmet expectation with measurable financial consequences.
Missed Deadlines Causing Client Loss
If a late deliverable caused a client to miss a contract, launch, filing, or opportunity, and they can document the financial harm, that's a coverable claim. Timelines matter, and the policy accounts for that.
Breach of Duty of Care
Professionals are held to a standard of care in their industry. When a client argues that you failed to exercise reasonable professional judgment and they suffered financially as a result, the E&O policy responds to your defense and any resulting damages.
Defense Costs for Covered Claims
Even claims that go nowhere are expensive to defend. Attorney fees, expert witnesses, and court costs are covered for any claim that falls within the policy, whether or not you're ultimately found liable.
Copyright Infringement in Professional Work
If a creative or content deliverable inadvertently infringes on intellectual property and you're sued, many E&O policies include this exposure. It's a growing source of claims for designers, writers, and marketing firms.
What Professional Liability Doesn't Cover
Professional liability is purpose-built for financial harm arising from your professional services. It doesn't replace other policies, and there are clear limits to what it covers. Knowing these exclusions helps you build a complete program.
Bodily injury or property damage. General liability covers these. Professional liability responds strictly to financial harm to a third party.
Intentional fraud or criminal acts. The policy is not a shield for dishonest conduct. Claims rooted in intentional wrongdoing are excluded across the board.
Claims arising before the retroactive date. Work performed before your retroactive date is not covered. This is one of the most common gaps we find and prevent.
Workers' compensation for your employees. That's a separate required policy. Professional liability has nothing to do with employee injuries.
Disputes between business partners or co-owners. Insured-vs-insured exclusions typically apply. Internal disputes are not a covered professional liability event.
Contractual penalties you agreed to pay. If your contract specifies a penalty for non-performance, that's a contractual obligation, not a liability claim. The policy won't respond to it.
Let's Review Your E&O Coverage
Most professionals don't know what their E&O policy actually responds to until a client threatens to sue. Let's find out before a claim does.