What Insurance Covers Professional Mistakes?

Professional liability insurance is designed for claims alleging a wrongful act or failure while providing professional services. The Texas Department of Insurance says E&O may cover damages arising from professional services and gives a client’s financial loss from a mistake as an example. That description supports the general purpose of the line; it does not mean every mistake, refund, or correction cost is insured.

The policy defines the services that qualify. A consultant’s analysis, an accountant’s work, a design deliverable, and a technology service can be treated differently, and some policies exclude particular guarantees or contractual obligations. Many E&O policies are claims-made, so the date the claim is first made and reported, as well as any retroactive date, can affect coverage.

Compare the policy’s professional-services definition with the work your business actually performs. Check the covered damages, defense-cost treatment, deductible, retroactive date, reporting conditions, prior-known-circumstance exclusion, and any subcontractor provision. If your service crosses into technology or media work, ask whether those activities need specific wording.