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Best Professional Liability Insurance: E&O Coverage & Costs

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KEY TAKEAWAYS
  • Professional liability insurance is also known as errors and omissions Insurance, or E&O insurance.
  • Errors and omissions insurance (E&O) is one of the most important insurances for companies and protects a business from claims of negligence or failure to perform professional services as contracted.
  • Professional liability plans typically cover expenses for third-party liability and defense costs in the event of a lawsuit.
  • The cost of E&O insurance varies based on the type of business, its size, prior claims history, and established risk management procedures.
  • Business owners should consider getting E&O insurance and ensuring that they have adequate protection from potential losses due to errors or omissions made by the company.
  • Each business is different and requires a unique set of coverage types. We recommend using an online quote tool to be matched with the right types of business insurance for your company.

Errors and omissions insurance (E&O), also known as professional liability insurance, is a type of insurance that covers businesses for claims of business negligence, malpractice, or failure to perform services as contracted by a customer.

“Errors” refer to errors or mistakes made by the company or employees. “Omissions” refers to omissions of information or advice given by the company. Therefore, errors & omissions insurance covers you from both forms of mistakes that could cause potential lawsuits for the company when a mistake is made. E&O can help your business cover legal defense costs for claims related to errors or omissions in your workmanship or professional advice given by your company’s employees or agents.

However, as with any insurance, coverage depends on the limits of the policy you purchase. For this reason, it is crucial to understand your insurance coverage and do research when selecting an insurer to ensure adequate protection.

In this article, we’ll show you what E&O coverage includes and how much it typically costs, and will provide helpful tips for choosing the best business insurance provider for your needs. But first, here is a look at our top picks for the best errors and omissions insurance.

Our top picks for errors and omissions insurance

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Travelers Insurance

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AMB Financial Strength
A++
Specialized for:
Tax & Accounting Trades

Why We Like It

Travelers is one of the largest insurance providers in the US and offers nationwide business insurance coverage.

Travelers can offer many different types of coverage for businesses of all sizes but is specifically well suited for Professional Liability plans for companies in the fields of:

  • Accounting
  • Bookkeeping
  • Tax Preparation

Travelers is a great choice for professional liability backing thanks to the brand’s nationwide coverage, 160 years of expertise, and top financial rating of A++ from AM Best.

Coverage Highlights

Professional Liability Coverage through Travelers offers access to:

  • $1 million occurrence limit & $1 million aggregate limit

Optional add-ons include:

  • Defense Outside Limits coverage

Arch Insurance America

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AMB Financial Strength
A+
Specialized for:
Professional Services + Wellness Trades

Why We Like It

Arch offers tailored professional liability insurance for small businesses in a variety of industries such as:

  • business consultants
  • professional services
  • health & wellbeing services

Arch offers unique coverage options which include a range of extra coverages not common to most professional liability plans. This makes it a great provider for small businesses that may need added protection.

Once signed up, customers love Arch’s local approach. The company is based out of New York but has several local offices throughout the US.

Arch also boasts a strong financial rating of A+ from AM Best and is backed by over $14 billion in funding making it a solid insurance firm.

Coverage Highlights

With Professional Liability through Arch, you can gain access to your choice of:

  • $1 million claim limit & $1 million aggregate limit
  • $2 million claim limit & $2 million aggregate limit

Other coverage highlights include:

  • $100k in Bodily injury & property damage coverage
  • $25k in Data incident response expense coverage
  • $25k in Non-party investigation expense coverage
  • Blanket Additional Insured endorsements (optional)

Hiscox Insurance

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AMB Financial Strength
A
Specialized for:
Most Small & Micro-businesses

Why We Like It

Hiscox is one of the largest insurance providers in the US and operates in all 50 states. It offers serval types of coverage options to suit your needs including:

  • General liability insurance
  • Professional liability insurance
  • Business personal property insurance (add-on)

Hiscox specializes in insurance for small and micro-businesses and its robust coverage options are available for tons of business types & trades. Hiscox also has over 120 years of experience behind its name as part of the original Lloyds group from 1901. This long track record speaks volumes for how trustworthy Hiscox is.

Coverage Highlights

General Liability Coverage through Hiscox offers your choice of access to:

  • $1 million occurrence limit & $2 million aggregate limit
  • $2 million occurrence limit & $3 million aggregate limit

Other coverage highlights for General Liability include:

  • $100k in coverage for damage to rented premises
  • $5k in coverage for medical payments
  • Blanket Additional Insured endorsement (automatically included)
  • Waiver of Subrogation endorsement (optional)

Professional Liability Coverage through Hiscox offers your choice of access to:

  • $1 million occurrence limit & $1 million aggregate limit
  • $2 million occurrence limit & $2 million aggregate limit
  • $3 million occurrence limit & $3 million aggregate limit

Business Personal Property add-on:

  • Business Personal Property coverage is available as an add-on to your Hiscox General Liability policy
  • Choice of coverage limits: $5k, $10k, $15k, $20k, or $25k

Preferra Insurance Company RRG

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AMB Financial Strength
A-
Specialized for:
Health & Wellness Trades

Why We Like It

Preferra offers high level General Liability and Professional Liability coverage for social workers, and health & wellness professionals.

Preferra’s plans are specifically tailored to offer high-quality and robust ($3 to $4 million) coverage limits.

Preferra is more than an insurance company. It understands the specific needs of health workers. In fact, their oversight board is made up not only of insurance experts but also social workers who understand the health and wellness field better than anyone. With social workers onboard, they always work toward the needs and interests of its clients.

This allows you peace of mind to focus on what matters most – helping your patients and clients.

Coverage Highlights

General Liability Coverage through Preferra offers access to:

  • $1 million occurrence limit & $3 million aggregate limit

Professional Liability Coverage through Preferra offers your choice of access to:

  • $1 million occurrence limit & $3 million aggregate limit
  • $2 million occurrence limit & $4 million aggregate limit
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What is E&O insurance?

Professional liability insurance is commonly known as Errors and omissions insurance (E&O). It’s a type of insurance that protects businesses against negligence claims or legal actions from customers who suffered losses as a result of inadequate work performed by your company.

If your company gave advice or services that caused a client financial harm, even if these claims are alleged or unsubstantiated, professional liability insurance can protect you from losses.

This typically applies to professionals like lawyers and consultants who offer advice to clients. However, it covers not only mistakes made in professional services but also the costs of a legal defense if a customer decides to sue—even if you haven’t done anything wrong.

E&O policies are an essential type of business coverage as they help protect you from financial loss in the event of a lawsuit relating to mistakes made by your business.

Who needs E&O insurance coverage?

Professional liability insurance coverage is essential for any business. Any business or professional that provides advice or services based on expert knowledge or training should consider buying E&O insurance.

Some examples of businesses that can benefit from gettting liability insurance for professionals include, but are not limited to the following:

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Accountants
Accountants strive to offer their clients sound financial advice, but mistakes can still happen. Accountants professional liability insurance can help protect accounting firms if they get sued due to errors made regarding a client’s finances or if they fail to deliver the services they promised.
Architects
As an architect, you work tirelessly to bring a client’s building dreams to life. However, if you miss a deadline, make a mistake, or breach your contract, you run the risk of being sued. Architect professional liability insurance can help protect your business.
Consultants
Consultants dedicate themselves to helping their clients achieve their business goals but some people are unhappy with the services provided. Consultant professional liability insurance can help protect consultants from lawsuits due to inaccurate information, bad advice, and more.
Lawyers
As a lawyer, you’re committed to your clients. Unfortunately, 80% of lawyers will be sued at some point in their careers, even if they’ve done everything correctly, so it’s best to be prepared. Lawyers professional liability insurance can help protect you from claims related to legal malpractice, missed deadlines, and breaches of contract.
Notary Services
People rely on notary professionals to do their jobs properly. Like with any job, mistakes can happen. E&O insurance for notary agents can cover legal expenses and court costs in case they get sued for missed deadlines, notary errors, or other oversights.
Real Estate Agents
As a real estate agent, you try to build a trusting relationship with your clients. But mistakes can happen, and you may find yourself with a lawsuit over incorrect information. Errors and omissions real estate insurance can help pay for your legal costs related to errors or oversights.
Even solo workers need protection. There are special policies suited for sole proprietors who work alone. A sole proprietor professional liability insurance policy can help protect your business by covering legal/court costs if you get sued for errors, omissions, malpractice, and more.
Your homeowner policy can help protect parts of your home-based business but not all of it. If you get sued for damages caused to your clients by your business, such as by providing wrongful information, your homeowner policy can’t help. Home-based business professional liability insurance can help pay for your legal fees if you get sued.
Contractors provide a necessary service to many people, but mistakes can happen. If you, for example, make a promise to a client that you don’t deliver on, they can sue you. Contractor professional liability insurance can help pay for court costs and legal fees if you get sued.
Photographers do everything they can to make their clients happy, but some people are difficult to please. E&O insurance can help protect photographers against claims of business negligence and lawsuits resulting from errors or omissions of information.
Esthetician professional liability insurance can help protect your business from claims of malpractice or negligence, like if a client has an allergic reaction to a product you used on them.
Salon professional liability insurance can help protect your salon from claims of business negligence, malpractice, or errors and omissions of information. This could be helpful if, for example, the treatment you gave a client didn’t meet their expectations and they chose to sue you as a result.
Personal trainers help to make their clients healthier and happier, but the industry comes with a risk of injury. Personal trainer professional liability insurance can help protect your business from lawsuits that may come as a result of, for example, pushing a client too far during their session.
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It’s important to understand that lawsuits can arise out of any professional service, which is why it’s essential to protect yourself with the right coverage. It’s a good idea to have E&O coverage even if you’re not legally required by your profession or state to carry it. Without it, you run the risk of being targeted by lawsuits or other legal action that can damage your company.

At the end of the day, human error still exists, and this type of insurance is invaluable to any business for safeguarding from financial losses due to mistakes or oversights.

If you are a professional providing advice or services, speak with an agent about how E&O coverage can help protect your business from expensive litigation costs and judgments.

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How does E&O insurance work?

E&O insurance works a lot like any other insurance policy when it comes to protecting your business.

If a client alleges that you made a mistake or failed to provide promised services, errors and omissions coverage can pay for legal defense costs and settlements or judgments up to the policy limits.

There are 4 main steps involved in securing coverage and filing E&O insurance claims:

1

Identifying your business risks

The process starts with identifying the potential risks your work poses to customers. This will be used to understand how much coverage you may need. Having risk management policies in place can help bring down the cost of E&O insurance.

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2

Applying for coverage

Next, your business will work with an insurance company to choose a plan and apply for coverage. Depending on the policy you purchase, E&O coverage may also cover claims related to intellectual property infringement, defamation, breach of contract, and cyber liability. You’ll be asked to provide information about your business, such as the type of business, its size, tax ID number, revenue, potential risks, and any prior claims made.

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3

Filing a claim

If your business encounters some form of professional liability after the coverage is active, the policyholder can file a claim to get assistance from the insurance provider.

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4

Coverage pays for damages

This coverage is designed to provide financial protection for service providers in the event of a claim or lawsuit. After submitting the claim, the insurance company will review the case and offer assistance. Typically, your plan will cover legal costs and judgments as well as other expenses such as post-judgment interest, court costs, and investigation fees.

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What does professional liability insurance cost?

As we’ve mentioned, the cost of E&O insurance depends on several factors, including the type and size of your business, your annual revenue, and the services you offer.

Typically, small businesses can expect to pay anywhere from $500 to $2,000 annually for coverage. Some providers may offer discounts or other incentives to help lower the cost of premiums and other professional liability insurance costs.

To give you a concrete example, we used the quote-building tool from our insurance partner, Simply Business, to run a simulation to determine the estimated cost of professional liability insurance.

We entered details for a California-based business consultant in 2023, without employees (sole proprietor), and with an annual revenue of $350,000. Based on these and other sample parameters, this errors and omissions insurance policy would cost $1,411 per year with $1 million in coverage per claim and $1 million in aggregate.

While this is just an example of how much E&O insurance costs, and how much you’ll pay will depend on your own circumstances, this errors and omissions insurance quote can serve as a benchmark to understand what someone could pay.

With that said, it’s important to get multiple professional liability insurance quotes and compare professional liability insurance coverages from different providers to find the best coverage at the most affordable price. Knowing what your business needs, as well as any potential risks you may face, can also help you get a better understanding of how much coverage to purchase.

What is covered by errors and omissions insurance?

Errors and omissions insurance protects businesses against financial losses resulting from mistakes or negligence.

Common types of claims covered by E&O policies include:

Depending on the errors and omissions policy you purchase, your coverage may also extend to other areas, such as:

It’s important to read the policy terms carefully and understand what is covered before you purchase a professional liability insurance policy. This can help ensure that your business has the protection it needs in case of a claim or lawsuit.

What isn’t covered by E&O insurance?

Errors and omissions insurance doesn’t cover:

  1. Intentional acts of wrongdoing
  2. Acts of sabotage
  3. Criminal activities

It also won’t cover any losses resulting from non-professional services. An example of this is if an employee provides a service or advice that they are not authorized to offer, and it results in a claim of negligence. This would be considered a non-professional service, and therefore, would not be covered by your insurance policy. This is another reason risk management procedures are important to consider when opting for professional liability insurance.

Additionally, some errors and omissions insurance policies don’t cover punitive damages in certain states. For this reason, it’s important to always check if a policy is available in your state and read the fine print for exclusions of coverage.

Apart from this, damage to physical items aren’t covered, such as bodily injury or property damage. For this you would need another type of insurance policy such as general liability, workers comp, inland marine insurance, etc..

You can also speak directly to the provider if you have any questions about the coverage offered by your E&O policy.

(855) 843-2963

Speak to an insurance professional for free!

More insurance types for your business

Depending on your business, you may want to pair E&O insurance with additional coverages.

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BOPs combine general liability & commercial property insurance into a single plan which can be cheaper than buying separate policies.
Examples of coverage:
  • Replacing stolen company equipment
  • Lawsuit from a customer slip & fall accident
Protects businesses from claims of bodily injury, property damage, and advertising injury to third parties such as customers, visitors, vendors, etc.
Examples of coverage:
  • Bodily injuries
  • Repairing/replacing property
  • Libel or slander lawsuits
E&O insurance (a.k.a. professional liability) protects professionals against claims of business negligence, as well as lawsuits resulting from errors or omissions of information offered by company representatives.
Examples of coverage:
  • Legal defense fees
  • Court costs
  • Settlements
This covers employee theft of valuables items or funds. Especially important for businesses that send workers to clients’ homes or businesses.
Examples of coverage:
  • Replacing stolen property
  • Reimbursement of stolen funds
Workers’ comp covers employers and employees from financial losses & liability if they become injured or ill due to work-related causes.
Examples of coverage:
  • Medical expenses
  • Lost wages
  • Legal fees
Commercial property insurance can pay to repair or replace business property, equipment, and merchandise that has been stolen, lost, or damaged –– includes coverage for buildings you rent or own.
Examples of coverage:
  • Merchandise is stolen from your warehouse
Specialized form of commercial property insurance that covers damage, loss, and theft of physical assets held at a business’ primary location –– It does not cover the building.
Examples of coverage:
  • Repair of physical assets
  • Replacement of physical assets
  • Legal fees
Umbrella insurance is a single plan that can flexibly extend general liability, employer liability, & commercial auto insurance limits if you max out on claim limits.
Examples of coverage:
  • Injuries to customers visiting your premises
  • Company auto-accidents & injuries
This covers company vehicles and employees who drive them. Includes coverage for injuries, and vehicle damage, medical payments, collisions, and more.
Examples of coverage:
  • Fixing vehicle after a collision
  • Paying for medical bills of injured occupants
Inland marine insurance covers physical assets like goods and equipment when in transit over land or temporarily stored at off-site locations. It covers movable items not typically covered by standard property insurance.
Examples of coverage:
  • Repair of physical assets
  • Replacement of physical assets
  • Legal fees
Malpractice insurance covers certain healthcare professionals against claims of negligence or business malpractice that results in bodily harm to a patient or client.
Examples of coverage:
  • Legal fees relating to lawsuits
  • Payouts for patient death or injury
Cyber liability insurance protects companies’ data & intellectual property from cyber-related risks such as financial losses caused by cyber-attacks, external data breaches, etc.
Examples of coverage:
  • Forensics investigation
  • Repairs & Recovery costs
  • Legal Defenses
Product liability insurance can cover claims and lawsuits resulting from product defects that cause injury or damage to customers.
Examples of coverage:
  • Customer is hospitalized due to your product
  • Lawsuits from marketing errors
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Professional liability insurance FAQ

What’s the difference between general liability and professional liability insurance?

General liability insurance protects businesses from physical risks like personal injuries or property damage. Insurance for professional liability protects against harm caused by company activities such as misinformation, negligence, or offering bad services that result in damage to clients.

Some examples of General liability protection include:

  1. Injury to clients or members of the public on company premises.
  2. Injuries caused to non-employees during business operations.
  3. Property damages that occur during normal operations (in some cases).

The main difference from professional liability is that this type of insurance does not protect a business against losses resulting from professional (intangible) work. Professional liability insurance, on the other hand, covers damages resulting from negligence, misrepresentation, or inaccurate professional work.

What’s the difference between E&O insurance and professional liability insurance?

Errors and omissions (E&O) insurance is the same thing as professional liability insurance, just called by another name. Specific coverages and terms can vary by provider, individual policy, or business. Generally speaking, though, the two terms are interchangeable.

Why do you need errors and omissions insurance?

Insurance for errors and omissions is essential for businesses offering services or advice—especially if it’s something clients rely on for making decisions. E&O provides coverage for financial losses resulting from mistakes, neglect, misrepresentation, or mismanagement.

This type of insurance is vital because it helps to protect your business from potential claims and lawsuits arising from the professional services you provide. In these cases, E&O insurance safeguards business owners against costly litigation costs and judgments if a client files a claim or lawsuit. If you are providing services or advice, make sure you have adequate E&O coverage in place.

When is E&O coverage required?

In many cases, professionals such as lawyers and doctors are required to carry E&O insurance to practice. However, even if your profession does not require coverage by law, having proper E&O coverage can help protect your business from financial losses due to mistakes or oversights.

In addition to legal requirements imposed on certain professions, some businesses may also contractually require their contractors to carry E&O coverage. Understand what type of protection you need and make sure you have adequate coverage in place before providing any services or advice.

How much E&O insurance do I need?

The amount of E&O insurance you need depends on the type of services or advice you provide and the size of your business. Generally, business owners should carry enough protection to cover potential claims or judgments up to three times the annual revenue generated from providing services or advice. Make sure your policy has adequate limits for legal defense costs, plus additional coverage for mental anguish damages, as these are generally excluded from most policies.

You should also consider if there is a need for special endorsements, such as cyber liability coverage to protect yourself against specific risks associated with data security breaches or other online exposures. Ultimately, speaking with an insurance agent is the best way to determine how much E&O insurance is right for your business.

What are the most common E&O claims?

The most common E&O claims arise from professional negligence, work that is mistaken or incomplete (contains errors or omissions), breach of contract, wrongful advice, and wrongful acts. Professional negligence involves any failure to meet accepted standards of care when providing services or advice. Errors and omissions refer to situations where there is an omission of a service or duty that should have been performed by the professional.

Breach of contract occurs when a professional fails to perform their contractual obligations. Wrongful advice is when an individual provides inaccurate information, guidance, or analysis that results in detriment to the client. Finally, wrongful acts are intentional wrongdoings such as fraud that result in financial losses for the recipient of services or advice.

In general, these claims can be difficult to defend against without proper E&O insurance coverage, as they often involve substantial defense fees and damages awarded due to lawsuits. It’s important for professionals offering services or advice to adequately protect themselves with E&O insurance so they can ensure financial security for their business well into the future.

Kiah Treece
Kiah Treece Business Finance

Kiah Treece is a business finance expert with more than five years of editorial experience. Through her experience as a small business owner, real estate investor, and lawyer, she’s knowledgeable in the areas of banking, loans, financing, and insurance for small businesses. Her first-hand experience has enabled her to break down complex financial topics to help consumers make informed decisions so they can spend their money wisely.

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