Professional liability insurance, also known as errors and omissions (E&O) insurance, is a type of coverage designed to protect professionals from claims made by clients for inadequate work or negligent actions.
This insurance is particularly essential for individuals or businesses that provide services, advice, or expertise, as it covers legal costs and potential damages arising from lawsuits related to professional services.
💡 Claims‑made coverage and tail protection
Most professional liability policies are written on a claims‑made basis. That means the policy that responds is the one in force when the claim is made, not when the work was done. To avoid gaps, professionals often maintain continuous coverage and may purchase tail (extended reporting) coverage when switching insurers or closing a business. Your agent can help you understand how your retroactive date and any tail coverage work.
|
Claim Example: A financial consultant advises a client to invest in certain stocks. Due to an error in calculations, the client experiences significant financial losses. The client sues the consultant for financial losses caused by the poor advice. Professional liability insurance may cover the claim for the consultant’s error. |
Failure to exercise the appropriate level of care or skill that a reasonably competent professional in the same field would have used, leading to client damages.
|
Claim Example: An architect designs a building with a structural flaw that does not meet safety standards. As a result, the building suffers damage, and the client sues the architect for negligence. The insurance may cover the costs of the lawsuit and any resulting damages. |
This coverage protects against allegations of negligence or failing to meet the professional standard of care. It primarily addresses errors that result in financial loss.
|
Claim Example: A marketing consultant promises a company a 30% increase in sales with a new campaign, but fails to deliver any substantial improvement. The company sues the consultant for breach of duty, claiming they misrepresented their capabilities. Professional liability insurance may help cover the legal defense and potential settlement. |
Even if a claim is baseless, the legal costs involved in defending the lawsuit (such as attorney fees, court costs, and investigation fees) are covered under professional liability insurance.
|
Claim Example: A software developer is accused of delivering a faulty product that allegedly caused significant financial loss to a client. Even though the developer believes they are not at fault, they still need to defend themselves in court. In this type of situation, the developer’s professional liability policy may help pay attorney fees and other defense costs if the claim falls within the policy’s coverage. |
In cases where a client accuses a professional of making defamatory statements that harm their reputation, this insurance may cover legal costs and damages.
|
Claim Example: A public relations consultant makes a statement about a competitor in a meeting with a client. The competitor claims the statement was defamatory and sues for damages. The consultant's professional liability insurance may cover the defense costs and any settlement related to the defamation claim. |
If a professional inadvertently infringes on a client’s intellectual property rights, this insurance may cover legal claims and associated costs.
|
Claim Example: A graphic designer creates a logo similar to an existing protected logo. The original brand owner sues for trademark infringement (and possibly copyright infringement) based on the confusing similarity. Some specialized professional liability/media E&O policies, or IP endorsements, may help cover defense costs and settlements, subject to policy terms. |
If a professional inadvertently discloses confidential client information, leading to damages or losses, this can be covered by the insurance.
|
Claim Example: A lawyer inadvertently discloses sensitive client information in an email sent to the wrong recipient. The client sues the lawyer for breaching confidentiality, claiming that the disclosure caused financial and reputational damage. The lawyer’s professional liability insurance may cover the legal defense and any compensation to the client. |
If a service is not provided in the way it was promised, or not delivered at all, and the client experiences financial loss as a result, this insurance can cover the claim.
|
Claim Example: An IT consultant agrees to configure and launch a new software system by a certain date, but due to configuration mistakes and poor project management on their part, the system is not working on time, and the client suffers financial losses. The client sues, alleging negligent performance of professional services. In this type of situation, professional liability insurance may help cover legal fees and any covered settlement, subject to policy terms. |
Intentional wrongdoing or criminal acts.
Property damage.
Employment-related disputes (covered under EPLI).
False advertising (Limited protection may be available under a general liability policy).
Numbers that prove it.
Independent. Licensed in all 50 states. Backed by partnerships with the carriers that matter to your business.
1,000+
Trades Insured
18+
Years In Business
240+
Years In Business
We partner with A-Rated AM Best Insurance Companies (ratings subject to change)
(888) 900 0205
