Coverage Guide — Updated August 2026
Professional Liability Insurance (Errors & Omissions)
Professional liability insurance — also called Errors & Omissions (E&O) — protects your business when a client claims your professional services, advice, or work caused them financial harm. General liability does NOT cover professional errors. If you provide any service for a fee, you need professional liability.
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Professional liability insurance — also called E&O — protects your business when a client claims your professional services, advice, or work caused them financial harm. General liability does NOT cover professional errors.
What It Covers ✓
- ✓Negligent acts, errors, or omissions in professional services
- ✓Failure to deliver services as contracted
- ✓Missed deadlines that cause financial harm to a client
- ✓Breach of professional duty
- ✓Defense costs for covered claims (even frivolous ones)
- ✓Claims alleging inadequate or substandard services
- ✓Professional liability for consultants, designers, advisors, and agents
What It Does NOT Cover ✗
- ✗Bodily injury or property damage (GL handles these)
- ✗Criminal or fraudulent acts
- ✗Employment practices claims (EPLI covers these)
- ✗Cyber breaches (requires cyber insurance)
- ✗Known claims or incidents prior to policy inception
Who Needs Professional Liability Insurance?
- →IT consultants and software developers
- →Financial advisors and accountants
- →Management consultants and business coaches
- →Marketing agencies and graphic designers
- →Real estate agents and appraisers
- →Architects and engineers
- →Insurance agents and brokers
- →Any business providing advice or professional services for a fee
How Much Does It Cost?
Solo consultant / freelancer
$500–$1,500/yr
Small professional services firm
$1,000–$3,500/yr
Technology company (IT, software)
$1,500–$8,000/yr
Architects and engineers
$2,000–$10,000+/yr
Key Terms to Know
Claims-Made Policy
Covers claims filed while the policy is active — regardless of when the error occurred, as long as the incident was after the retroactive date. Professional liability is almost always claims-made.
Retroactive Date
The date before which incidents are not covered by a claims-made policy. Having a retroactive date from when you started your business is critical — don't let it advance when you switch carriers.
Tail Coverage / Extended Reporting Period
Coverage purchased after a policy ends to cover claims filed later for incidents that occurred during the policy period. Essential when retiring, selling a business, or switching carriers.
Per-Claim / Aggregate Limit
Per-claim limit is the maximum paid per individual claim. Aggregate limit is the maximum paid across all claims in a policy period. Most standard policies offer $1M per claim / $1M aggregate as a minimum.
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