Professional Liability Insurance (E&O)
Professional liability, also called errors and omissions, covers claims that your professional work or advice caused someone a financial loss. General liability covers physical injury and property damage; E&O covers the harm that comes from the work itself. Losses from a data breach or ransomware are a separate line of coverage: cyber insurance.
When It Comes Up
A design error leads to a costly rework. A missed deadline causes a client to lose a contract. A consultant's recommendation doesn't perform as promised.
Claims-Made Matters Here
Most E&O is written claims-made, meaning it responds only to claims reported while the policy is active. Two consequences follow:
- Retroactive date. Work done before that date generally isn't covered. Keeping an unbroken retro date when you change carriers protects your past work.
- Tail coverage. If you let a claims-made policy end without buying an extended reporting period, work you completed last year has no coverage when the claim shows up next year. This matters when you retire, sell, or switch carriers — see buying a business.
Who Usually Needs It
Anyone paid for expertise, design, advice, or a professional service. Also anyone whose client contract requires it.
Questions People Ask
What's the difference between general liability and E&O?
General liability covers bodily injury and property damage. E&O covers financial loss caused by your professional work or advice.
What is a retroactive date?
The date your claims-made coverage starts reaching back to. Work performed before it generally isn't covered, so preserving it across carrier changes matters.