Errors and omissions insurance protects your business when clients claim your work caused them harm. For example, if you're a financial advisor and a client sues you for $150,000 claiming your investment advice led to major losses in their retirement account, E&O insurance would cover your legal defense and any settlement. Most people call it professional liability insurance because you can interchange these terms.
What Does E&O Insurance Cover?
E&O insurance covers professional mistakes and negligence claims when clients say your services caused financial harm.
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Updated: September 4, 2026
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What Is E&O Insurance?
What Items Does E&O Insurance Cover?
While E&O insurance provides financial protection when clients claim professional mistakes and negligence, it won't cover every business risk. Knowing what it does and doesn't cover can save you from costly surprises when you file a claim.
Professional Negligence | ✅
| You're an accountant who makes a tax calculation error that costs your client $12,000 in penalties |
Failure to Deliver Services | ✅
| You're a web developer who can't get your client's e-commerce site launched on time |
Giving Incorrect Advice | ✅
| Your investment recommendations don't work out, costing your client $50,000 |
Missing Deadlines | ✅
| You miss a crucial court filing deadline and your client loses their lawsuit |
Discrimination Claims | ✅
| A client sues you claiming your HR advice led to discriminatory hiring practices that got them sued |
Cyber Liability | ❌ | Hackers break into your systems and steal client data (you'll need cyber insurance) |
Bodily Injury | ❌ | Someone trips and falls in your office (that's what general liability is for) |
Intentional Wrongdoing | ❌ | You deliberately mislead clients about what you can deliver |
Criminal Acts | ❌ | Your employee steals money from client accounts (look into crime insurance) |
Property Damage | ❌ | Your equipment breaks something at a client's office (general liability covers this) |
E&O Insurance vs. General Liability Insurance
Most businesses need two standard insurance policies: errors and omissions insurance and general liability insurance. Here's what each one covers and when you'll use them:
What It Covers | Professional mistakes, negligence, failure to deliver services | Bodily injury, property damage, personal injury |
Typical Claims | Client loses money due to your advice or services | Someone gets injured on your property or by your products |
Best for Industries Like | Consultants, financial advisors, tech companies, real estate agents | Food & beverage, retail stores, contractors, manufacturers |
Take this scenario: A real estate agent failed to disclose a property defect, costing the client $35,000 in repairs. The client tripped on a loose carpet during a meeting at the realtor's office. That's where both policies come in. E&O insurance covers professional mistakes (disclosure failures), while general liability covers physical injuries (office accidents).
E&O Insurance Coverage: Bottom Line
When clients sue over professional mistakes, E&O insurance pays your legal bills and settlements. It handles negligence and missed deadlines, but not cyber incidents or bodily harm. For financial advisors, real estate agents, IT consultants and accountants, it's the difference between surviving a lawsuit and losing everything.
About Angelique Palenzuela-Cruz
Angelique Palenzuela-Cruz is a Business Insurance Content Writer at MoneyGeek, where she specializes in general liability, workers’ compensation and professional liability insurance. Her work helps small business owners understand how these policies apply to coverage, including risks like customer injuries, employee injuries, professional mistakes, client contract terms and industry-specific coverage requirements.
She primarily covers service-based businesses where liability and employee coverage decisions are especially important, including cleaning, consulting, beauty and wellness, childcare, education, fitness, food service, pet care, repair and maintenance, and other professional services.
Before joining MoneyGeek, Angelique spent nearly 12 years at Guthrie-Jensen Consultants, one of Southeast Asia’s largest management training firms, where she advanced from Training Consultant to Managing Consultant. In that role, she worked with business clients to assess operational needs, develop training programs and present performance analyses to executive decision-makers. She also helped establish Gladwin Training Consultancy, where she served in learning solutions and client service roles.
Her background gives her practical context for writing about how businesses operate, manage client expectations, structure teams and make risk decisions. At MoneyGeek, she applies that experience to business insurance content, connecting coverage to actual business needs.
LinkedIn: linkedin.com/in/ma-angela-cruz
Email Contact: angelique.palenzuela@moneygeek.com