Also called Errors & Omissions Insurance or E&O insurance protects businesses and professionals when a client claims they made a mistake, gave bad advice, failed to deliver services properly, or caused a financial loss through their professional work.

It is commonly used by consultants, accountants, lawyers, architects, engineers, real estate agents, IT professionals, marketing agencies, therapists, and many other service-based businesses.

What Professional Liability Insurance Covers

Typical coverage includes:

 

• • Negligence claims
    A client says your work caused them financial harm because of an error, omission, or oversight.

• • Legal defense costs
    Attorney fees, court costs, settlements, and judgments — even if the claim is groundless.

• • Missed deadlines or undelivered services
    If a client alleges your failure to complete work caused losses.

• • Errors in professional advice or services
    For example, incorrect recommendations, flawed designs, coding mistakes, or inaccurate financial guidance.

• • Copyright or advertising-related claims (sometimes)
    Certain policies may cover accidental intellectual property infringement or misrepresentation.

• • Data/privacy issues (limited)
    Some modern policies include limited cyber-related professional mistakes, though full cyber insurance is usually separate.

What It Usually Does Not Cover

Professional liability insurance generally excludes:

 

• • Intentional fraud or criminal acts

• • Bodily injury or property damage
    (covered by General Liability Insurance instead)

• • Employee injuries
    (covered by Workers’ Compensation)

• • Cyberattacks/data breaches beyond limited endorsements

• • Contract disputes unrelated to negligence

• • Guarantees of business results

Example Situations

 

• • An IT consultant deploys software incorrectly, causing downtime and revenue loss.

• • An accountant files taxes with a major error.

• • A marketing agency uses copyrighted material accidentally.

• • A real estate agent omits important disclosure information.

• • A therapist is sued for alleged professional negligence.

How Much It Costs

Costs vary based on profession, revenue, risk level, location, claims history, and coverage limits.

Typical U.S. small-business ranges:

Profession	Approximate Annual Cost
Freelancers / consultants	$300–$1,000
IT professionals	$500–$2,500
Marketing/design agencies	$600–$2,000
Accountants/bookkeepers	$700–$3,000
Architects/engineers	$2,000–$10,000+
Medical professionals	Often much higher (malpractice insurance)

Common policy limits:

 

• • $250,000

• • $500,000

• • $1 million

• • $2 million+

Deductibles often range from:

 

• • $500–$5,000+

Factors That Affect Price

Insurers look at:

 

• • Industry/profession

• • Annual revenue

• • Number of employees

• • Contract sizes

• • Claims history

• • Coverage limit selected

• • Whether you handle sensitive data

• • Geographic location

Difference Between Professional Liability and General Liability

Professional Liability	General Liability
Covers financial harm from professional mistakes	Covers bodily injury/property damage
Service-related claims	Physical accident claims
Example: bad advice	Example: client slips in your office

Many businesses carry both policies together.