If your business provides professional services or advice, Professional Liability insurance (often called Errors & Omissions, or E&O) is crucial. It covers claims that your services caused a client financial harm due to mistakes, negligence, or a failure to perform as promised.
General liability covers bodily injury and property damage. Professional liability covers something general liability specifically excludes: financial loss caused by the way you did your job. If a client claims your advice cost them money, your tax filing was wrong, your IT migration corrupted their data, or your design specification didn't meet code, E&O is the policy that responds.
Professionals such as consultants, IT service providers, accountants, architects, engineers, marketing professionals, real estate agents, insurance agents, financial advisors, technology firms, and many others who offer specialized services or advice should strongly consider E&O coverage. Many Florida licensing boards now require it, and most B2B contracts will not be signed without proof of professional liability coverage.
Most professional liability policies are written on a CLAIMS-MADE basis, meaning a claim must be made and reported during the policy period (and the alleged wrongful act must have happened after the policy's retroactive date). This is different from general liability, which is usually occurrence-based. Claims-made policies are cheaper but create a tail-coverage need when you switch carriers or retire. We explain this carefully and never let clients accidentally drop their retroactive date.
General liability covers bodily injury and property damage (someone trips in your lobby). E&O covers financial loss from your professional services (your advice or work caused a client to lose money). Most service professionals need both, since the two policies cover non-overlapping risks.
On a claims-made E&O policy, the retroactive date establishes how far back the policy will respond. Work performed BEFORE the retroactive date is not covered, even if the claim is made during the current policy. When switching carriers, we always negotiate to preserve the original retroactive date so prior years of work remain covered.
Tail coverage (or Extended Reporting Period) lets you report claims that come in AFTER your claims-made policy ends, as long as the alleged wrongful act happened during the policy term. It's important when you retire, sell the business, or switch to a carrier that won't honor your old retroactive date. We'll always discuss the tail option at termination.
It varies by carrier. Many E&O policies have defense costs INSIDE the limit, meaning legal fees reduce what's available for settlement. Some policies offer defense OUTSIDE the limit at a higher premium. For Florida professionals exposed to multi-month litigation, we strongly prefer policies with separate defense limits or "first dollar defense" structures.
Most professionals start at $1M per claim / $1M aggregate, with $2M / $2M common for higher-revenue firms or contract requirements. The right limit depends on your largest project size, your contract requirements, and the worst-case financial loss a client could plausibly attribute to your work. We'll review your engagement letters and recommend.
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