Professional Liability Insurance

Professional liability insurance also called errors and omissions (E&O) covers claims that your professional advice, services, or work caused a client financial harm. It pays for legal defense and settlements even when claims are unfounded or you believe you did nothing wrong.

Consultants, designers, accountants, architects, IT professionals, financial advisors, and other service providers whose work directly affects client outcomes. Many clients, RFPs, and contracts require proof of E&O coverage before engaging with a service provider.

General liability covers physical incidents bodily injury and property damage. Professional liability covers financial harm caused by professional errors, omissions, or negligence in your services or advice. Both are often needed, but they cover very different types of claims.

No. Professional liability covers unintentional errors and negligence not deliberate misconduct or fraud. Most policies also exclude bodily injury, property damage, and criminal acts. Coverage is intended for disputes about the quality, accuracy, or completeness of professional work.

Many small firms carry $1 million per claim, which is also the amount many client contracts and RFPs specify. Higher-stakes work, larger clients, or regulated professions may call for more. Your contract requirements and the financial impact your work could have on clients are the main guides.

It depends on the nature of the dispute. Claims alleging negligent work, errors, or omissions in your services are typically covered. Disagreements over fees, scope, or deliberate breach of contract generally are not. Policy language controls, so review how yours defines covered claims.

Premiums are generally deductible as an ordinary business expense. Confirm specifics with a qualified tax professional for your situation.