What Does Professional Liability Insurance Cover?
Usually, it responds to covered claims alleging that your professional services or advice caused a client harm, often a financial loss.
Professional liability, also called errors and omissions (E&O), is designed for allegations about work you performed or failed to perform as a professional. Texas DOI says it can help with settlements, legal fees, and judgments when a services mistake costs a client money. Coverage still depends on the policy’s definition of covered services and wrongful acts, claim and reporting dates, exclusions, deductible, and limits. A sample Hiscox form, for example, ties coverage to claims first made and reported during specified periods for wrongful acts after its retroactive date. Compare the services named in your quote with your contracts and actual work; ask whether defense expenses erode the limit.
For a useful comparison, place the proposal beside the contract scope and identify the wrongful act, covered damages, and required notice. Ask whether a demand, arbitration, or regulator complaint counts as a claim.
Related Coverage
Sources
- FAQ: Professional liability insurance. Texas Department of Insurance; What’s professional liability coverage?; What types of damages…; What’s general liability insurance?; Do I need professional liability… if I have general liability…?; Is professional liability insurance required?; Can a client require…?; What’s the difference between occurrence policies and claims-made policies. Accessed 2026-09-25.
- Professional liability insurance. Insurance Information Institute; Opening paragraphs (professional services/advice and E&O name); Claims not covered by general liability; What types of businesses need professional liability insurance?; What’s covered… and what’s not (claims-made versus occurrence, defense and judgments, non-financial/intentional limits, BOP/in-home exclusion). Accessed 2026-09-25.
- Professional Liability – US Direct Errors and Omissions Insurance. Hiscox Inc. specimen; About this Policy / Coverage for Claims Made Against You; I.A Insuring Agreement; I.B Defense; I.C Settlement; II.A Notice of Claims; II.C Optional Extended Reporting Period; III.A, III.K, III.M, III.R, III.S Exclusions; IV.A–B Limits and Deductible; VI.O Professional Services; VI.U Wrongful Act. Accessed 2026-09-25.
