Professional Liability Insurance (PL) & Errors & Omissions (E&O)

This specific policy type is designed to protect traditional professionals (accountants, attorneys, real estate brokers, consultants, etc.) against liability incurred as a result of errors and omissions, giving faulty advice or counseling a client when the advice leads to a financial loss, in performing their professional services.

There are a few specific exceptions or excluded professionals (physicians, architects, and engineers), who have professional policies designed for their professional.

The key feature of Professional liability policies is they only cover economic or financial losses suffered by third parties, as opposed to bodily injury (BI) and property damage (PD) claims.

Bodily injury and property damage claims are typically covered under commercial general liability (CGL) policies.

Most Professional liability policies are written on claims-made coverage. Also, when investing in a Professional liability policy, you should consider that these policies commonly contain one benefit that includes legal defense costs. This can vastly reduce the coverage amount for the claim should a judgement in favor of the plaintiff be rendered.

Who Benefits From Professional Liability Insurance?

The types of businesses that benefit from professional liability insurance are ones who work directly with customers by providing services.  A customer or client can sue even if you’ve done nothing wrong. If a customer or client believes for example, they received inferior service, mistakes were made or they received bad advice from your company, they may make a claim or even sue your business.


Professional liability insurance helps cover common claims including negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. Depending on the terms, a professional liability insurance policy may also help cover privacy violations.

How Much Does Professional Liability aka Errors and Omissions Insurance Cost?

The cost of an E&O or Professional Liability Policy is determined by several factors including:

  • Your Industry aka Business risk – The more exposure to risk (aka claims) the higher the cost of errors and omissions insurance.
  • The Amount of Coverage limits – Higher limits result in higher insurance cost.
  • Claims (loss) history – Frequent and or sizable claims, as well as type of claims can increase your errors and omissions insurance cost.

Please understand, no one wants insurance until there is a claim. The bottom line is, if needed, Errors & Omissions Insurance cost will be much less expensive than a lawsuit.


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