Professional Liability Insurance (E&O) for Small Businesses

Yes — both names are for the same type of coverage. Professional liability insurance and E&O both help protect against claims tied to your work or advice.

No, for the most part. (There are rare exceptions for certain industries.) E&O insurance focuses on financial loss from your services.

For physical injuries or property damage — like a slip-and-fall accident — you would need general liability insurance.

Sometimes, yes. Certain clients — especially larger companies — may require you to have professional liability insurance before signing a contract.

Even when it’s not required, it still can be a smart safeguard.

Most professional liability policies are claims-made. That means if there is no retroactive date,  the policy must be active at both the time the incident occurs and when the claim is made.

If a business owner closes their doors or switches to an “occurrence” policy, they need a “tail” or “tail coverage” to cover claims that come in later for work done in the past. Without this, you could be left  legally and financially exposed.

The difference in coverage between a claims-made policy and an occurrence policy is when the claim arrives on your door.

For a claims-made policy, there must have been an active policy both (a) when the incident occurred and (b) when the claim was finally made. If one of those contingencies is not met, a claims-made policy likely will not respond. In order to have coverage, the policyholder would need either (i) a Prior Acts endorsement to cover anything that happened prior to the policy term, or (ii) a tail on the current policy, if you decide not to continue coverage after the current term.

In some cases, yes — but not always. A BOP typically bundles general liability and property coverage.

Professional liability is often purchased separately or included as an add-on, depending on the insurer and your business type.