Professional liability insurance, often called errors and omissions or E&O, covers a different kind of claim than general liability. It responds not when your business physically harms someone, but when your advice, service, or work is alleged to have caused a client financial loss.
E&O covers claims of negligence, mistakes, or failure to deliver a professional service as promised, along with the defense costs, which can be substantial even when the claim is unfounded. For anyone who provides advice or services for a fee, consultants, agencies, technology firms, financial and real estate professionals, this is often the coverage that matters most, because their core risk is the work itself, not a slip on the floor.
A key feature: E&O is typically written on a claims-made basis, meaning it covers claims made while the policy is active, not just incidents that occur then. That makes continuity important, and gaps in coverage risky, because a claim arising later from earlier work may not be covered if the policy lapsed. Understanding the claims-made structure is part of buying it correctly.
Any business whose product is essentially its judgment or expertise should consider E&O, and clients increasingly require it before signing. Matching the coverage to the specific professional risk, and maintaining it continuously, is what makes it effective.
Insure the advice, not just the accident.
This is general information, not personalized insurance advice. Coverage terms, definitions, and availability vary by policy and provider.