What Is Professional Liability or E&O Insurance?

Professional Liability insurance, also known as Errors and Omissions (E&O) coverage, is designed to protect your business against claims that professional advice or services you provided caused a customer financial harm due to actual or alleged mistakes or a failure to perform a service.

In addition to responding to your customer’s financial losses, professional liability coverage can help your business:

• Pay legal expenses. Whether your business is at fault or not, legal costs can add up. A professional liability policy can help your firm cover unexpected legal fees—for valid claims and frivolous suits alike.
• Meet contractual requirements. Many corporate service contracts require professional service providers to carry professional liability coverage.
• Compete. Carrying professional liability coverage can give you a competitive advantage by giving your customers an extra level of security.

What Types of Businesses Require Professional Liability Insurance?

Any business that provides its clients with expert guidance, information, or knowledge-based services—such as a bookkeeper, marketing consultant, or executive recruiter—can benefit from professional liability coverage. Certain specialized or licensed businesses like architecture and engineering firms, and software development companies can find professional liability solutions designed specifically for their sector.

What Types of Claims are Made Against Professional Service Firms?

Professional liability claims range widely. However, they are generally based on a customer’s perception that a professional services firm has:

• Failed to complete expected tasks. A customer expects a services firm to complete a greater scope of work than what was delivered, resulting in losses to the customer.
• Provided erroneous guidance. A customer claims that it suffered financially because a professional services firm provided inaccurate, incomplete, or misleading information or guidance.

Your business can also help prevent professional liability claims from arising or limit their severity by taking key steps to limit errors and disputes in the first place. Explore Chubb Elite Professional Indemnity Insurance here.