Errors & Omissions.
General liability pays when someone is hurt. E&O pays when your work was.
If your business advises, designs, manages or delivers work a client relies on, your real exposure is not physical injury. It is a client saying the work was wrong and asking to be made whole.
General liability will not respond to that. It covers bodily injury and property damage and specifically excludes claims arising from professional services. E&O fills the gap, and it defends you even when the allegation is baseless, which is most of the time and still expensive.
Injury, or the work itself
Most service businesses carry general liability and assume they are covered. They are covered, for the wrong thing.
General liability
Someone slips in your office, or you damage a client’s property. Physical harm, physical damage. It explicitly excludes anything arising from your professional services.
Errors and omissions
A client loses money because of your work. A missed deadline, a design flaw, incorrect advice, a filing error, a service that did not deliver what was promised.
Where the confusion costs money
A claim denied under the wrong policy is discovered at the worst possible moment, usually after the client has already engaged a lawyer.
Most service firms need both
They cover different halves of the same business, and bought together in a package they are frequently cheaper than bought apart.
Claims-made, and why the date on the policy matters
This is the single most consequential thing to understand about E&O, and it is almost never explained at the point of sale.
The report date is the trigger
Coverage responds based on when a claim is made against you, not when you did the work. Work you completed three years ago is covered by this year’s policy, provided cover has been continuous.
The retroactive date
The line in the sand. Work before it is not covered at all. Once established, it should be protected as carefully as the limit itself.
A lapse resets everything
Let the policy lapse and the new one usually starts a fresh retroactive date, leaving every past project uninsured. This is how businesses lose years of protection over an administrative gap.
Tail coverage on exit
Selling, merging or retiring ends the policy but not the exposure. An extended reporting period keeps the door open, and it is far cheaper arranged in advance than negotiated afterwards.
What actually gets alleged
Rarely dramatic incompetence. Almost always a gap between what the client believed they were buying and what they received.
Missed deadlines
A filing, a submission, a renewal that passed. Frequently the clearest and most indefensible category, and one of the most common.
Scope disputes
The client expected something the contract did not include. Good engagement letters prevent more claims than good work does.
Advice that did not hold
A recommendation the client relied on and lost money following. The question is not whether you were right, but whether your process was defensible.
Work by a subcontractor
You are usually responsible for people delivering under your name. Their error becomes your claim, and their insurance may not respond to it.
Confidentiality and data
Client information disclosed or mishandled. Sits at the boundary with cyber, and where the two policies meet is worth confirming explicitly.
Failure to deliver
A project abandoned, delayed or never completed. Frequently follows a commercial dispute rather than a technical failure.
The wording decides the outcome
Two E&O policies with the same limit can behave completely differently. What separates them is how the professional services are defined, what the exclusions carve out, and whether defence costs erode the limit.
Check the definition of services
If the wording does not describe what you actually do, a claim can fall outside it. This is the first thing we read and the most common problem we find.
Defence inside or outside the limit
If defence costs erode the limit, a long dispute consumes the coverage you were relying on to settle. Outside-the-limit wording is worth real money.
Protect the retroactive date
When moving carriers, carrying the existing date forward is negotiable and routinely forgotten. We do not move a policy without it.
Then shop appetite
Professional lines are written by specialists, and appetite by profession varies enormously. A risk one carrier prices punitively is another’s target class.
Send us your policy and we will read the definition of services.
That clause, the retroactive date and the defence-cost treatment tell you more about whether the policy will work than the premium ever will. No cost, no obligation.
E&O, answered plainly
What is the difference between E&O and general liability?+
General liability covers bodily injury and property damage. E&O covers financial loss a client suffers because of your professional work: an error, an omission, missed advice, or a service that did not perform as promised. They cover different things, and most service businesses need both.
Is E&O the same as professional liability?+
In practice yes, and the terms are used interchangeably. Some industries prefer one label over the other, and certain professions use more specific names such as malpractice. The coverage intent is the same.
What is a claims-made policy?+
E&O is almost always claims-made, meaning the policy that responds is the one in force when the claim is reported, not the one in force when the work was done. That is the opposite of how general liability usually works, and it causes most of the mistakes people make with this coverage.
What is a retroactive date?+
The date from which past work is covered. Anything performed before it is excluded entirely. Continuous coverage preserves that date; letting a policy lapse resets it, which quietly strips protection from every project already delivered.
What happens if I retire or close the business?+
Because it is claims-made, cancelling ends coverage even for work already completed. Extended reporting, known as tail coverage, preserves the ability to report claims after the policy ends. Anyone winding down should buy tail rather than simply cancelling.
Does it cover claims I believe are baseless?+
Yes, and that is much of its value. The policy funds your defence regardless of merit, and on a professional dispute defence costs regularly exceed any settlement. Most E&O claims end with no payment to the claimant and still cost real money.
Do clients require it?+
Increasingly, yes. Many contracts now specify an E&O limit and require a certificate before work begins. It has become a condition of winning business as much as a protection against losing it.
What is excluded?+
Deliberate wrongdoing, criminal acts, and claims you knew about and failed to disclose. Bodily injury and property damage belong on general liability, cyber events on a cyber policy. Exclusions are where policies differ most, which is why the wording matters more than the premium.