General liability covers the customer who slips in your office. Professional liability covers the customer who says your advice, your design, or your work cost them money.
Coverage is subject to eligibility and carrier underwriting.
Professional liability — also called errors and omissions, or E&O — protects a business against claims that its professional services caused a client a financial loss. Typical allegations include negligence, mistakes, missed deadlines, incorrect advice, and failure to deliver what was promised.
These claims are expensive to defend even when they have no merit. A large part of the value of an E&O policy is the defense: lawyers, experts, and the time it takes to show that you did the work right.
General liability policies cover bodily injury and property damage. A client’s purely financial loss from your advice or services is not bodily injury or property damage, and most general liability policies also exclude professional services directly. The two policies cover different things.
Business, management, marketing, and HR consultants whose recommendations clients rely on.
Developers, IT service providers, and managed service providers — often combined with cyber coverage.
Agents, brokers, property managers, and appraisers.
Architects, engineers, surveyors, and interior designers.
Bookkeepers, tax preparers, and payroll services.
Design-build contractors and trades that provide design or engineering as part of the job.
Almost every professional liability policy is written on a claims-made basis, and the details decide whether a claim is covered.
| Term | What it means |
|---|---|
| Claims-made | The policy that responds is the one in force when the claim is first made against you — not the one in force when the work was done |
| Retroactive date | Work performed before this date is not covered. Keeping the same retro date when you renew or change carriers preserves coverage for older work |
| Extended reporting period (“tail”) | Extra time to report claims after a policy ends without being replaced — important when you retire, close, or sell the business |
| Defense within limits | Many E&O policies reduce the available limit by every dollar spent on defense |
| Consent to settle | Terms governing whether the carrier can settle a claim without your agreement, and what happens if you refuse |
Limitation-of-liability clauses help, but they do not stop a client from suing, are not always enforced, and do not pay for your defense. Many clients and contracts also require you to carry professional liability.
If the new policy does not honor your existing retroactive date, work you did before the switch may no longer be covered. This is the most common avoidable gap in professional liability.
Generally, no. Intentional, dishonest, and criminal acts are excluded, though many policies will defend you until such conduct is established.
Often more so. A single claim can cost a solo professional more in defense than a year’s revenue. Premiums for small firms are usually tied to revenue and the type of work.
Tell us what your business does and what your contracts require. We will compare policy forms, not just prices, and pay close attention to the retroactive date.
Cadabra Asset Protection LLC is a licensed independent insurance agency serving New Jersey and Pennsylvania. Michael Lindner Jr., licensed insurance producer.
Professional liability policy forms vary significantly by carrier and profession. Coverage for any particular claim depends on the policy language, the retroactive date, and when the claim is made and reported.
Coverage descriptions on this page are general summaries provided for informational purposes only. Coverage, limits, endorsements, and exclusions vary by carrier and by state, and actual coverage is governed solely by the terms of the issued policy. This page is not an offer of insurance and is not a guarantee that coverage will be issued. All coverage is subject to eligibility and carrier underwriting approval.
Nothing on this page is legal advice, and no attorney-client relationship is created by its use or by contacting this agency for insurance services.
