When a client claims your advice cost them money.
Updated 2026 · 37 industries covered · All 50 states
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Professional Liability Insurance — also called Errors & Omissions (E&O) — protects businesses that provide professional advice, expertise, or services from claims that their work was incorrect, late, incomplete, or caused a client financial harm. When a client sues claiming your advice cost them money, your project caused a loss, or your deliverable failed to meet expectations, E&O covers your legal defense costs and any resulting settlement or judgment. General Liability doesn't cover these claims — GL protects against physical harm; E&O protects against financial and professional harm. For any business that sells expertise, E&O is not optional.
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General Liability covers physical harm to people or property — a client trips and falls at your office, or you damage a client's equipment. Professional Liability covers economic and reputational harm — a client claims your advice, service, or deliverable cost them money. Both address completely different exposures and neither replaces the other. Most professional service businesses need both policies in force simultaneously.
Most professionals pay $50–$400/month depending on profession, annual revenue, coverage limits, and claims history. Low-risk consultants and business coaches pay $50-$100/month for $1M coverage. IT firms, financial advisors, and healthcare-adjacent professionals pay $150-$400+/month. Real estate agents and lawyers in active plaintiff states can pay significantly more. Get quotes from carriers specializing in your profession for the most competitive pricing.
It's legally required for specific licensed professions in some states — lawyers, healthcare providers, financial advisors, and real estate agents in various jurisdictions. It's contractually required by enterprise clients as a condition of engagement — they won't sign contracts without proof of E&O. Even when not legally or contractually required, any professional providing advice or services that affects a client's financial outcome faces meaningful exposure without it.
Most E&O policies are 'claims-made' — they cover claims filed while the policy is active, regardless of when the underlying work was performed. This differs from 'occurrence' policies (standard for GL) that cover incidents occurring during the policy period regardless of when claims are filed. The practical implication: if you cancel your E&O policy, claims for past work are no longer covered unless you purchase tail coverage. Never let E&O coverage lapse without buying a tail policy.
The retroactive date is the earliest date from which prior professional work is covered under your claims-made E&O policy. If your retroactive date is January 1, 2023, work you performed before that date is not covered — even if the claim is filed after your policy began. When buying a new E&O policy, ensure the retroactive date goes back to when your business started. When switching carriers, ensure the new carrier matches your prior carrier's retroactive date to avoid leaving any prior work uninsured.
Generally no — standard E&O covers your own professional work and the work of your W-2 employees. If you use subcontractors, require them to carry their own E&O and name you as an additional insured on their policy. Verify this before engaging any subcontractor on a client project. Some E&O carriers offer endorsements to extend coverage to subcontractor work — ask your broker.
First: don't panic and don't admit fault. Second: contact your E&O carrier or broker immediately — most policies have a 'potential claim' notice requirement, and failure to notify promptly can jeopardize coverage. Third: gather all documentation related to the engagement — contracts, emails, deliverables, change orders. Fourth: let the carrier's legal team handle client communications. Trying to resolve E&O situations informally without involving your carrier often makes things worse and can constitute a coverage violation.
Yes, but your options narrow and cost increases. One prior claim in 3-5 years is manageable — most standard carriers will quote with a claims surcharge or specific exclusion. Multiple claims or a large judgment may require placement in the excess and surplus (E&S) market through a specialty broker. Be fully transparent about prior claims when applying — misrepresentation on E&O applications is grounds for policy rescission, which means no coverage when you need it most.
My Digital Kube is a commercial insurance comparison platform operated by Insurance Pro Agencies, Inc., a licensed insurance agency. Professional Liability Insurance (E&O) is available in 47 states (excludes AK, HI, FL). Content reviewed by licensed commercial insurance professionals. Last updated 2026-10-24. Individual rates vary — compare quotes for your specific profile. See our editorial policy.