Commercial · coverage line
Professional liability.
Errors & omissions — covers claims that your professional advice or services caused a client financial harm. Critical for any advice-based or service-driven business.
What it is.
GL covers physical harm (someone tripped, your equipment damaged a building). Professional liability covers economic harm caused by your work — bad advice, missed deadlines, design defects, errors in service. Almost always claims-made, which means continuous coverage matters: lapse it once, lose all your prior work.
The lines in your policy.
Each one is its own knob. The carrier's default rarely fits a real life.
What a claim looks like.
Three anonymized files. Numbers are illustrative.
CPA prepares return with a calculation error. IRS assesses $48K in penalties + interest. Client demands the firm cover it. E&O pays $48K plus $14K defense costs. Without coverage, the firm pays personally.
Consultant recommends a vendor selection that turns out poorly. Client sues for $180K in damages. Defense alone runs $42K before settlement. E&O covers both.
Engineer retires. Two years later, a project from 5 years ago surfaces a design defect. Tail (extended reporting period) purchased at retirement covers the claim. Without tail, the policy ended at retirement and prior work was unprotected.
How to read a e&o policy.
The four things worth looking for on the dec page, in the order we read them.
The first page tells you who's actually covered, on what address, and under whose legal entity. A surprising number of policies have the wrong name, the wrong address, or a missing additional insured, and you don't find out until you file a claim. Cross-check it against your driver's license, your title or lease, and any contract that requires you to be insured.
Policy limits are abstract until you stack them against the assets they protect. A $300k liability limit feels generous in isolation; against a $1.2M home and a college fund, it isn't. Walk down each numbered line on your dec page and ask: if this were the cap on the worst day, would I be okay?
Page one shows you the base form. Pages four through twelve show you what the endorsements added, and, more importantly, what they took away. Water-damage exclusions, roof-payment schedules, named-storm deductibles, scheduled-valuables caps. These small numbered forms decide more claims than the headline limits do.
Carriers re-rate, re-form, and re-endorse policies at every renewal. If you keep last year's dec page, a side-by-side read takes ten minutes and tells you which limits drifted, which sublimits got cut, and which endorsements quietly disappeared. It's the single most useful habit in personal insurance.
Frequently asked questions.
What's a retroactive date?
The earliest date for which a claims-made policy will cover work. Claims from work performed before this date are not covered. When switching carriers, always negotiate to keep the original retro date — losing it strands all prior work.
Do I need tail coverage when I retire or sell?
Yes, almost always. Without tail, claims that arrive after the policy ends (for work done during the policy) are uncovered. Tail typically costs 100-300% of the last annual premium for 1-3 years of extended reporting.
Is E&O the same as malpractice?
Practically yes for most professions. 'Malpractice' is the term used for medical and legal professionals; 'E&O' is broader. Same coverage concept: economic harm caused by professional services.
Is defense outside the limit or inside?
Varies by carrier and form. Outside-limit defense is materially better — a $1M policy with $200K of defense leaves $1M for indemnity. Inside-limit defense leaves you $800K. Always specify outside-limit when available.
Want a second read on your e&o policy?
Send us your declarations page. You'll get it back marked up, in plain language, with the gaps and the over-coverage flagged, yours to keep, no obligation to switch.
or phone (913) 408-7280
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