Business Insurance for Professional Liability

Errors and Omissions insurance, also called Professional Liability insurance, protects your business when a client claims you made a mistake, gave bad advice, or failed to deliver the services you promised. Even if you did nothing wrong, defending against a lawsuit can be financially devastating. E&O insurance covers legal defense costs, settlements, and judgments, allowing you to focus on running your business instead of worrying about litigation.

Why Your Business Needs This

• Clients can sue you for mistakes or perceived failures even when you followed best practices


• Legal defense costs alone can drain your business finances before a case is even settled


• General liability insurance doesn't cover professional errors or negligence claims


• Many contracts and clients require proof of E&O coverage before working with you


• One lawsuit can damage your reputation and threaten your business survival

What It Covers

E&O insurance covers claims arising from your professional services. This includes allegations of negligence, errors, omissions, misrepresentation, or failure to perform services as agreed. The policy pays for your legal defense costs including attorney fees, court costs, and investigation expenses. If you're found liable or choose to settle, E&O insurance covers settlements and judgments up to your policy limits. Coverage typically extends to current and former employees who provide services on behalf of your business.

Who Needs E&O Insurance?

Any business that provides professional services or advice should carry E&O insurance. This includes consultants, real estate agents, insurance agents, accountants, IT professionals, marketing agencies, architects, engineers, and financial advisors. If clients rely on your expertise or services to make decisions or achieve outcomes, you need this coverage.

Does General Liability Cover Professional Mistakes?

No. General liability insurance covers bodily injury and property damage, but it explicitly excludes professional services claims. If a client sues you for bad advice, missed deadlines, or failure to deliver results, your general liability policy won't respond. You need E&O coverage for those risks.

How Much Coverage Do I Need?

Coverage limits depend on your industry, client contracts, and exposure level. Many professionals carry between one and two million in coverage. Review your client contracts to see if they specify minimum coverage amounts, and consider the potential financial impact of a claim against your business. Your LSM Insurance agent can help you determine appropriate limits based on your specific situation.

What If a Claim Happens After I Retire or Close My Business?

Claims can be filed years after you complete a project or provide advice. That's why many E&O policies are written on a claims-made basis, meaning the policy in effect when the claim is made is the one that responds. If you retire or close your business, you may need to purchase tail coverage to protect against future claims for past work.