Business
E&O Insurance: What It Covers and What to Check
Published September 24, 2026 · Last updated October 1, 2026
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The short answer
E&O insurance, short for errors and omissions, covers you if a client says your work or advice cost them money. It pays your legal defense and any settlement, up to your limit. Small businesses pay about $88 a month on average for this kind of coverage.
E&O and professional liability are two names for the same coverage. Real estate agents, insurance agents, and tech pros usually call it E&O. Consultants, bookkeepers, and designers usually call it professional liability.
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What is errors and omissions insurance?
E&O covers mistakes in the work itself. Maybe you missed a deadline, gave wrong numbers, or left something out. If a client says that cost them money, E&O helps pay to defend you and settle the claim.
It doesn't cover someone getting hurt or property getting damaged. That's general liability.
Who asks for E&O by name
Real estate agents
Your broker or state may require it. Common claims say you missed a defect, gave a bad square footage number, or missed a deadline that cost a buyer or seller money.
Insurance agents and brokers
Carriers often require it before they let you sell. Claims often say the wrong coverage was placed or a policy wasn't bound in time.
Tech and IT pros
Software work, IT support, and managed services get claims when a project runs late, a system fails, or work doesn't match what the contract promised. Many client contracts spell out a dollar limit you must carry.
Others who use the E&O name
Mortgage loan originators, title agents, home inspectors, accountants, and staffing firms.
How much does E&O insurance cost?
Price range
Small businesses pay about $88 a month on average for professional liability, also called E&O.
Not a quote or an offer. Your price comes from the insurance company. Source: Insureon, 2026 (based on its small business customers).
What moves your price
- Your field. Some kinds of work get claims more often than others.
- Your sales. Bigger jobs can mean bigger claims.
- How much coverage you buy. Higher limits cost more. Many contracts ask for $1 million.
- Your deductible.
- Past claims.
- How long you've done the work.
The timing rule: claims-made policies
Most E&O policies are "claims-made." That means you need the policy both when the mistake happened and when the client makes the claim.
Retroactive date. Mistakes you made before this date usually aren't covered. Keep it the same when you renew or switch companies.
Tail coverage. Extends the time you can report claims after your policy ends. It matters if you retire, close, or switch to a company that won't honor your old retroactive date.
What to ask before you choose
- "Is this a claims-made policy?"
- "What's the retroactive date?"
- "Does my lawyer's bill come out of my limit?" Often it does, which leaves less to pay a claim.
- "What does tail coverage cost?"
- "Does this meet what my contract or my state requires?"
Keep reading
Pair it with general liability and cyber insurance. See every coverage in small business insurance cost.
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