Professional Liability vs. Errors & Omissions Insurance

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The difference between errors and omissions and professional liability insurance can be confusing for new business owners. Why? Because the terms are often used interchangeably.

Some industries typically use the term “Errors and Omissions insurance” — including real estate agents, insurance agents and property managers.

Other industries call this type of insurance “professional liability,” including architects, engineers, lawyers, accountants and other professions.

However there’s one big exception at NEXT — we offer a contractors errors & omissions policy that is specific for the construction industry. That policy has some important differences compared to professional liability and errors & omissions for other industries.

No matter what you call this type of insurance, you get coverage tailored to your business needs when you buy with NEXT.

What is Professional Liability or E&O insurance?

Professional liability insurance, also known as E&O insurance, is an important type of business insurance common among professionals working in an advisory capacity.

It can help provide coverage for financial losses if a business mistake leads to a lawsuit or other financial implications.

If you make a mistake on the job — or if a client thinks that you did — this insurance can protect your business by helping to cover the cost of your error or defending you against a civil lawsuit or negligence claim.

Note: It’s important to read your policy details closely to make sure you have the coverage you need and are aware of any exclusions.

What’s the difference between Professional Liability insurance and Error & Omissions?

There is usually no difference in the coverage provided by professional liability and errors & omissions.

Professional liability or E&O insurance can help pay for:

  • Professional negligence (actual or alleged)
  • Legal defense costs
  • Legal judgments

This insurance also helps pay for legal expenses or defense costs if your company is falsely accused of professional mistakes.

Who needs Errors & Omissions insurance?

Almost every type of business can benefit from professional liability or E&O coverage.

Any business that works with clients could be accused of a professional mistake and face a  lawsuit, which can be very costly without coverage.

The following are just a few examples of situations in which businesses need professional liability coverage to avoid unexpected expenses:

  • A homeowner suspects their housekeeper damaged their countertops by using the wrong cleaning product.
  • An architect is blamed for a building oversight in their plans, resulting in expensive setbacks in the construction schedule.
  • An accountant makes a paperwork mistake that leads to significant tax penalties.

How much does Professional Liability insurance cost?

Professional liability insurance costs start as low as $18.34 monthly or $220 annually, but the exact price you’ll pay depends on your particular circumstances.**

Learn more about professional liability costs.

What most of our customers pay for Professional Liability insurance

At NEXT, 52% of our customers pay between $25 or less to $45 per month for professional liability business insurance.**

Several factors influence the cost for this insurance, including what type of work you do, where you work, how many employees you have and how many years you’ve been in business.

Bottom line: Businesses usually don’t need Professional Liability and Errors and Omissions

Since there is usually no significant difference between professional liability and errors and omissions, businesses usually only need one of these two policies, not both.

Professional liability and E&O both help protect businesses against the following types of risks:

  • Work mistakes: When you make a professional error, both professional liability and errors and omissions insurance can help cover any financial losses.
  • Accusations of negligence: If a client claims that your business actions caused financial harm, they can sue you for professional negligence. Whether you actually made a mistake or not, professional liability and E&O insurance can help cover the costs of defending yourself or pay for legal judgments.

The only difference between these two types of insurance is the name. Whether your business gets professional liability or E&O insurance will depend on which industry you’re in.

NEXT helps small businesses get liability insurance

At NEXT, we make it easy to get affordable, tailored coverage based on your unique needs.

We can help you set up a custom package for your business that includes either professional liability or E&O insurance, along with any other policies you may need. Other insurance options we offer include general liability, workers’ compensation, commercial property and business owner’s policy.

You can save up to 10% when you bundle multiple policies.

With our online services, you can do everything right from your computer or mobile device in about 10 minutes. Just answer a few questions, review your policy options and download your certificate of insurance as soon as your coverage is active.

Get your instant insurance quote today.

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Let’s find the coverage you need for your business
Business insurance is divided into different policies. We offer seven types so it's easy to design the coverage that fits your business.
General Liability insurance
General Liability
Protect yourself from accidents that cause physical injury or damaged property.
Professional Liability or Error and Omissions Insurance
Professional Liability/E&O
Shield yourself from lawsuits that claim your work errors caused financial losses.
Workers' Compensation Insurance
Workers’ Compensation
Cover medical bills and lost wages if your employees have an accident at work.
Commercial Auto Insurance
Commercial Auto
Stay on the road with coverage for dents, tows and damage to someone else’s vehicle.
Tools & Equipment Insurance
Tools & Equipment
Upgrade your general liability coverage to protect any gear that’s stolen, damaged or lost.
Commercial Property Insurance
Commercial Property
Keep your building, inventory and equipment protected from fire or water damage.
Business Owner’s Policy Insurance
Business Owner’s Policy
Combine general liability and commercial property into one policy to protect your business.
* To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.
** The cost data presented here are based on NEXT active customers in the U.S. who purchased professional liability insurance over the previous 12 months. These data should not be considered a substitute for obtaining a quote specific to your business. These data were updated in July 2022.
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Issuance of coverage is subject to underwriting. Not available in all states. Please see the policy for full terms, conditions and exclusions. Coverage examples are for illustrative purposes only. Your policy documents govern, terms and exclusions apply. Coverage is dependent on actual facts and circumstances giving rise to a claim. Next Insurance, Inc. and/or its affiliates is an insurance agency licensed to sell certain insurance products and may receive compensation from insurance companies for such sales. Policy obligations are the sole responsibility of the issuing insurance company. Refer to Legal Notices section for additional information.

Any starting prices or premiums represented before an actual customer quote are not guaranteed and are representations of existing premiums of active policies as of December 6, 2023. To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.