Errors and Omissions Insurance

E&O insurance, also known as professional liability insurance coverage, protects professional services firms from claims of errors, omissions or negligence.  

No. While technically the term professional is limited to certain licensed professionals such as physicians, lawyers and architects, in practice Errors and Omissions insurance and professional liability Insurance are interchangeable.

The amount of E&O insurance needed is based on risk exposure. What is your business’ greatest exposure? You’ll want to make sure you’re fully covered for it.

For example, an investment services firm’s biggest exposure may be clients litigating over an investment strategy that didn’t pan out. For an architecture firm, the possibility of a faulty building design represents a major risk. Other factors in determining coverage amounts include the state in which a business operates, the number of its employees and its revenue. Also, keep in mind that the Errors and Omissions policy is generally written so that legal defense costs erode the limit of coverage. Significant defense fees could limit or even exhaust the amount available for a settlement or judgment.

Any business or individual that provides professional services or advice should consider E&O insurance. Even when your work meets industry standards, a client who experiences a financial loss may attribute it to a mistake or miscommunication and file a claim regardless of whether negligence occurred. The cost of defending against that claim, even a baseless one, can be significant.

Regulatory and licensing requirements add another layer of consideration. In many jurisdictions, certain professionals must carry E&O insurance before receiving or renewing their license, or as a condition of registration with a governing body. Contract requirements are equally common. Large organizations frequently require vendors and service providers to show proof of E&O coverage before engaging them. A HUB advisor can help you understand the requirements specific to your profession, region and client base.

Errors and omissions insurance covers claims arising from mistakes, oversights or failures in the professional services you provide. This includes situations where a client alleges that your work, advice or recommendations caused them a financial loss — even if you believe you performed your services correctly.

E&O policies can also be structured to cover work performed prior to the policy's inception date, back to a specified retroactive date. This prior acts coverage matters particularly for professionals purchasing coverage for the first time or switching carriers, as gaps in retroactive coverage can leave older work unprotected. Claims against professional services often arise long after the work is completed, making this an important consideration when setting up or renewing your policy.

If your business engages independent contractors or temporary staff, your E&O policy can also be structured to extend coverage to work they perform on your behalf. Even when work is outsourced, you may still bear professional responsibility for the outcome, so ensuring your contractors are covered under your policy gives you broader protection as your team grows.

E&O insurance does not cover damage to your business’ property or injuries sustained in or on your property, which are claims suited to general liability or property/casualty coverage. In addition, Errors and Omissions insurance doesn’t cover illegal activities and fraud. 

Errors and Omissions insurance covers your business for the professional services it offers to customers and clients, and any claims against those services. D&O insurance covers your business’ directors, officers and employees for the decisions they make on behalf of the business.  

Yes, as the negligence pertains to the firm’s professional services. 

Follow these steps: 

• Notify your broker and carrier as soon as possible.
• Submit relevant documentation that includes a narrative of the events leading up to the claim.
• Anticipate the claim adjuster’s questions; provide the answers with your claim’s submission.
• Work with your broker to make sure the submission is complete.

Surety bonds protect a firm’s clients for their losses in the event you fail to perform as promised. Errors and Omissions insurance protects the professional or business owner for the claim made against them when your professional service harms a third party such as a client.

To effectively limit your exposure to professional liability, it’ is vital to have a comprehensive E&O insurance policy in place. This policy should encompass coverage for Errors and Omissions, as well as protection against claims of negligence, breach of contract, and misrepresentation. Additionally, businesses can mitigate their exposure to professional liability by implementing robust risk management practices. These practices include providing ongoing training and education to employees, conducting regular audits and reviews, and establishing clear policies and procedures for professional services. By taking these proactive steps, businesses can significantly reduce the risk of errors and omissions, thereby minimizing their exposure to professional liability.

E&O insurance addresses one specific and significant slice of professional risk claims arising from your services or advice. A complete risk management program for a professional services business typically includes several complementary coverages working alongside it.

General liability insurance covers bodily injury and property damage claims that arise from your business operations but fall outside the scope of professional services. A business owner's policy combines general liability with commercial property coverage in a single package, providing broad foundational protection.

Cyber liability insurance responds to data breaches and network security failures, including claims involving client data you are responsible for protecting. This is an exposure specifically excluded from most E&O policies.

Because these coverages are designed to work together, gaps or overlaps between them are a real risk when you purchase policies separately without a coordinated review. HUB advisors can assess your full coverage portfolio and help you build a program where each policy addresses the exposures it’s designed for without leaving critical gaps unaddressed.

Most E&O policies carry two distinct limits that work together to define the boundaries of your coverage. The per-claim limit is the maximum amount the policy will pay on any single claim, including defense costs and any resulting settlement or judgment. The aggregate limit is the maximum the policy will pay across all claims filed during the policy period, which is typically one year.

The distinction matters more than many policyholders realize. If your per-claim limit is $1 million and your aggregate is $2 million, a single large claim could consume half your annual coverage before the policy renews. In industries where multiple claims in a single year are plausible, such as financial services, technology consulting or healthcare, an aggregate limit that is too low relative to your actual exposure can leave you underprotected at mid-year. A HUB advisor can help you assess whether your current limits reflect the realistic frequency and severity of claims in your field.

Tail coverage, formally known as an extended reporting period, is an addition to a claims-made E&O policy that allows claims to be reported after the policy has ended for work performed while the policy was active.

Because claims-made policies only cover claims filed during the active policy period, cancelling or non-renewing a policy without tail coverage can leave previously completed work exposed, even if that work was performed professionally and without issue.

Tail coverage becomes particularly important in a few specific situations. Professionals retiring or winding down a practice need it to protect against claims that may surface after they stop carrying active coverage. It’s equally important when switching carriers, since a new carrier's policy may not cover work performed before its retroactive date, creating a window of unprotected exposure between the old and new policy.

The cost and duration of tail coverage varies by carrier and profession, and some policies include a limited tail period automatically. Understanding your options before a policy lapses rather than after is critical, and your HUB advisor can walk you through what is available under your specific policy.

Yes, in most cases prior claims do not disqualify a business or professional from obtaining E&O coverage. Insurers understand that claims are a normal part of operating in a professional services environment and generally evaluate prior claims as part of a broader underwriting assessment rather than as an automatic barrier to coverage.

That said, prior claims will affect your application. Carriers will ask you to disclose any claims or circumstances you are aware of, typically going back three to five years. The nature, frequency and outcome of those claims will influence both your premium and the terms offered. A single resolved claim with no outstanding exposure is treated very differently from multiple open claims or a pattern of recurring issues.

Some carriers may also apply exclusions related to specific prior circumstances. Being transparent in your application is essential. Failing to disclose known claims or circumstances can result in a denial of coverage at the time of a claim, regardless of whether the new claim is related to the prior ones. A HUB advisor can help you present your claims history accurately and identify carriers best suited to your risk profile.