Professional Liability / E&O Insurance

Covers claims when your work, your advice, or your deliverables cause a client financial harm. The key is making sure the policy definition of "professional services" matches what your firm actually does.

What it covers

Mistakes and oversights. You miss a deadline, deliver work that doesn't meet spec, or make an error that costs your client money.
Bad advice. A client follows your professional recommendation and it causes them financial harm.
Service failures. Your service goes down, a project falls through, or the work product doesn't perform as promised.
Intellectual property claims. Someone alleges your work infringes on their patent, copyright, or trade secret.
Data loss. Your work causes a client to lose or corrupt their data.

The definition problem

Every E&O policy defines what "professional services" means. That definition controls what's covered. If it doesn't match what your business actually does, the policy won't pay when you need it to.

Most brokers don't check. They submit the application, get a quote, and never read the definition. I compare your policy definition against your actual operations and flag the mismatches.

How this goes wrong:

An accounting firm that also does advisory work. Policy covers "tax preparation and bookkeeping." Carrier argues financial advisory services aren't covered. Claim disputed.

A law firm that expanded its practice areas. Policy covers "litigation and corporate law." The estate planning matter that went wrong? Not in the definition.

A consulting firm that also does implementation. Policy covers "consulting and advisory services." Carrier argues implementation isn't advisory. Claim disputed.

What E&O doesn't cover

E&O does not cover data breaches, cyberattacks, or failure to protect client data. Most E&O policies explicitly exclude these. If your firm stores client data -- and every professional services firm does -- you need a separate cyber insurance policy.

Who needs E&O

Any firm that provides professional services, advice, or specialized work to clients. Accountants, lawyers, consultants, IT firms, architects, engineers -- if clients pay you for your expertise and something goes wrong, E&O is what protects you.

For accounting firms, this is often called Accountants Professional Liability (APL). For law firms, it's legal malpractice insurance. The underlying coverage is similar, but the policy definitions and exclusions vary significantly by profession. Getting the right one matters.

Watch out: retroactive dates. If you switch carriers, make sure your new policy covers work you did before the switch date. A gap here can leave you exposed on past engagements.