Also called Professional Liability, E&O protects your business when a client claims your work, advice or service caused them financial harm, covering defense costs even when the claim is groundless. This guide explains what it covers, where contracts and claims-made wording create gaps, and how to tell whether your policy would respond.
Written by Sophia Zaller of Alton Risk, a former carrier-side underwriter. Updated October 2026.
Insurance that pays defense costs, settlements and judgments when a client says your work, advice or service caused them a financial loss. Also called Professional Liability.
Who needs it
Any company that gets paid for expertise: software, consulting, design, implementation, managed services or advice. Enterprise customers often require it in the contract.
Biggest pitfall
Assuming a contract-driven dispute, a lapse in coverage or a gap in the retroactive date will be covered, when claims-made wording and contractual liability exclusions often decide the outcome.
What drives price
Revenue, the services you sell, the contracts you sign, how much of the client’s money your work can affect, claims history and the limits you buy.
Typical limits
Enterprise and master service agreements commonly ask for $1M to $2M at minimum, so check the contract before you choose a number.
The basics
What is E&O insurance, in plain English?
If your company gets paid for its expertise, whether that is software, advice, design, implementation or managed services, E&O is foundational. It responds when a client alleges that a mistake, an omission, a missed deadline, professional negligence or work that did not perform as promised cost them money. It pays legal defense, settlements and judgments, and it defends you even when the allegation is unfounded.
The easiest way to place E&O is by what the claim is about. If a customer sues because your work was wrong, late or incomplete, that is an E&O claim. If someone is hurt at your office, that is general liability. If your systems are breached, that is cyber. If investors sue the board, that is D&O. E&O is the policy for what the company sells and how well it delivers, not for how the company is run or how it is secured.
E&O and Professional Liability are the same coverage, and the name just changes by industry. Tech, financial and real-estate firms say “E&O”; consultants, accountants, architects and agencies say “Professional Liability”; licensed professions call it “Malpractice.” If a contract asks for one and your policy says the other, it is almost always the same protection. We confirm the scope and turn around certificates fast so a deal never stalls on a naming mismatch. The wording and limits matter, not the heading on the policy. See the glossary entries on errors and omissions and professional liability.
Who needs it
Who needs E&O, and when?
Short answer: you need E&O the moment a client can plausibly say your work cost them money, which for most companies is the first paid contract. What changes as you grow is how much money rides on your work and how many customers require proof of coverage. This is general guidance, and your lawyers can tell you where specific duties apply.
First paid customer
Someone now relies on your work. A mistake has a dollar value.
Discuss
Enterprise pilot
Procurement asks for a certificate before kickoff.
Get ready
Security review and MSA
The contract lists required policies and minimum limits.
Buy now
Scaling services
More clients, bigger deployments, higher stakes per engagement.
Review limits
Exit or wind-down
Claims about past work can arrive after the doors close.
Plan tail
Rule of thumb
Bind E&O before the pilot kickoff, not after procurement sends the checklist. A certificate request with a closing date is the worst time to start an application.
Where you are
Do you need E&O?
Why
Pre-revenue, building a product
Not yet, but plan ahead
No client is relying on your work. Revisit the day you sign a paid pilot, accept a deposit or promise a delivery date.
First paying customers, small contracts
Yes, soon
Even a small client can allege that late or faulty work cost them far more than your fee. Some contracts ask for proof of coverage before work starts.
When the service itself is the product, E&O is often the coverage that matters most.
Regulated or financial services (fintech, payments, data or compliance tooling)
Yes, read the wording closely
Clients and counterparties may claim that your errors caused financial or compliance losses. Check how the policy treats regulatory matters and financial services work.
Using contractors or subcontractors to deliver
Yes, and confirm their work is covered
Clients usually hold you responsible for work you outsource. Ask how the policy treats subcontractor errors.
Short answer: any business whose product is judgment, advice or delivered work. For these companies, E&O is usually the policy that responds to the most likely claim, so it sits at the center of the program rather than at the edge.
Business
Why E&O leads
What to watch
Consulting and advisory
The deliverable is advice. A client who acted on it and lost money has an obvious claim theory.
How the policy defines professional services, and whether guarantees of results are carved out.
Software and SaaS
Bugs, outages, failed implementations and missed SLAs hurt customers financially. Most buyers want Tech E&O wording.
Whether product failures, downtime and data-related claims are in the insuring agreement. See Cyber / Technology E&O.
Fintech and financial services providers
Errors in payments, reporting, compliance support or data handling can cause clients financial loss.
Exclusions for regulated activity, handling client funds or lending. See fintech.
Agencies, design and marketing
Campaigns, creative and strategy are judged against promised results and deadlines.
Intellectual property and advertising injury wording, and whether media content is covered.
AI product and implementation companies
Model outputs and integrations can fail in ways clients did not expect.
AI-specific exclusions and what counts as a covered service. See AI liability.
Staffing, IT services and managed providers
You operate inside the client’s business, so your mistakes become their losses.
Subcontractor treatment and contractual liability wording.
Scope
What E&O covers, and what it doesn’t
What’s Covered
Mistakes, omissions and missed deadlines in your professional services
Professional negligence and bad advice that a client says caused a financial loss
Failure to deliver the results or performance a client says you promised, subject to the wording
Errors by your employees acting within their jobs, and often by contractors, depending on the policy
Defense costs, settlements and judgments, including for claims that turn out to be groundless
For technology versions, product failures, outages and missed service levels
What’s NOT Covered
Most E&O policies exclude:
Bodily injury and property damage, which belong on general liability
Data breaches and security incidents, which belong on cyber
Intentional, dishonest or fraudulent acts, once established
Liability you take on only by contract, in many forms
Claims about management decisions, which belong on D&O
Employment claims, which belong on EPL
Claims arising from work or facts known before the policy began
Scope in detail
What counts as a professional service?
Short answer: whatever the policy says it is. The definition of professional services, or in technology forms the description of your technology services, is the single most important sentence in an E&O policy, because the policy responds only to claims arising from those services.
A narrow definition can leave a real part of your business outside the policy without anyone noticing until a claim. A company that sells software, runs implementations and also offers training should see all three described. The questions below are the ones worth settling before you bind.
Are all the services you actually sell listed?
Insurers write coverage for the services described in the application and policy. A service line that is missing may be treated as unrelated to the insured business.
Why it matters: Add new offerings as you launch them, and describe them the way a customer would.
Does it include errors, negligence and failure to perform?
Most forms cover negligent acts, errors and omissions. Broader wording also reaches failure to deliver or perform as promised.
Why it matters: Many real claims are about work that did not meet expectations, not outright mistakes.
Are your employees and contractors covered for their work?
Policies usually cover your employees. Whether they also cover people you hire to help deliver depends on the wording and on the contract with them.
Why it matters: Clients usually hold you responsible for outsourced work, so confirm how it is treated.
Does the policy cover work done before the policy started?
Why it matters: A short look-back can leave early customers uninsured.
Contracts and promises
Does E&O cover breach of contract?
Short answer: sometimes, and only partly. E&O generally covers claims that your professional work was negligent or fell short, even if the client frames it as a breach of contract. It usually does not cover liability you accepted only because you signed it, such as a promise to pay or a guarantee of a result.
The distinction matters because most client disputes in services are about a contract. The policy looks past the label to the underlying cause. If the claim is that your work was done carelessly, the contract is the setting, not the reason the insurer says no. If the claim is that you agreed to something and did not honor it, whatever it cost you to honor it is generally outside the policy. Your lawyer can advise on how a specific dispute would be characterized.
Contractual liability exclusion
Many policies exclude liability you assume under a contract that you would not have had without it. Good wording carves back liability you would have anyway.
Why it matters: This is the most common reason a contract-heavy company finds a gap. Ask for the carve-back in writing.
Guarantees and warranties
A promise that software will hit a number, or that a project will deliver a specific outcome, can be excluded when it goes beyond ordinary professional care.
Why it matters: Marketing language and statements of work can create promises your policy does not support.
Fee disputes and refunds
Returning or reducing fees is usually not covered, though defending a claim that includes a fee element often is.
Why it matters: Do not assume a refund demand will be paid by insurance.
Service credits and liquidated damages
Credits and agreed penalties for missing a service level are usually a cost of doing business, not a covered loss, unless the policy says otherwise.
Why it matters: Read the SLA section below before you agree to automatic credits.
Indemnities you give the customer
Promises to cover the customer’s losses can exceed what the policy covers. Some forms treat third-party indemnity differently from direct claims.
Why it matters: Match the indemnity you sign to the cover you actually have.
Rule of thumb
Read the contract before the policy, then read the policy against the contract. The promises you make in the agreement are the ones the policy has to survive.
Which policy responds?
E&O vs. the coverages it’s confused with
Claims rarely arrive labeled. Here is how common situations usually map to the policies a technology or services company carries. Treat it as a guide, because forms differ and a combined package can blur the lines.
Scenario
E&O
Tech E&O
Cyber
General liability
A consulting client says your advice cost them money
Covered
Covered, if the service is described
No
No
A customer says your team missed a deadline on a fixed-fee project
Covered
Covered
No
No
A customer says your software failed and disrupted their business
Often not, unless technology services are covered
Covered
No
No
An outage leads a customer to claim damages under your SLA
Depends on the form
Covered, if SLA claims are included
No
No
Hackers breach your systems and customer data is exposed
No
Often only the liability side
Covered, including response costs
No
A visitor trips and is injured at your office
No
No
No
Covered
A customer sues over a result your contract guaranteed
Often limited
Often limited
No
No
Enterprise contracts
Service-level agreements, indemnities and what your policy will take on
Short answer: E&O responds to claims about your work, but the contract you signed can raise your exposure beyond what the policy was written for. SLAs, uncapped indemnities and broad warranties are the clauses that most often open a gap between what the customer expects and what insurance pays.
Contract clause
What it asks of you
How E&O typically treats it
Uptime or performance SLA
Meet a stated level, often with credits for missing it
Credits are usually a business cost. A damages claim after a serious failure may fall under Tech E&O, depending on the wording.
Limitation of liability
Caps what you owe the customer, sometimes with carve-outs
A cap helps you, but carve-outs for certain claims can leave you exposed above the policy limit.
Indemnification for third-party claims
Pay if someone else sues the customer because of your work
May be covered only in part, or only if the policy extends to liability you assume. Confirm before signing.
Warranty of performance
Promise the work will meet a specification or outcome
Guarantees beyond ordinary professional care may be excluded.
Waiver of consequential damages
Both sides give up claims for indirect losses
Helpful, but customers often negotiate exceptions that matter.
Data and security obligations
Protect customer data and notify on incidents
Usually a cyber question, not E&O. Ask how the two policies fit together.
The practical move is to review the insurance and liability clauses together, ideally before the redline goes back to the customer. Your lawyer can advise on the legal effect, and we can tell you how the policy would likely respond. The same clause can be harmless in one policy and a gap in another.
Rule of thumb
Do not accept unlimited liability in a contract just because a policy exists. Insurance has a limit, and an uncapped promise does not.
How the policy works
Claims-made, retroactive dates and continuity
Short answer: most E&O is claims-made, so it responds to claims first made while the policy is in force and only for work done on or after the retroactive date. Continuous coverage, with the same or an earlier retroactive date at every renewal, is what keeps past work insured.
Work is delivered
You finish a project in a year when Policy A is in force.
Year 1
Coverage changes
Policy A ends. Policy B begins, or coverage lapses.
Year 2
A claim arrives
The policy in force today responds, if its retroactive date reaches back to the work.
Year 3
Rule of thumb
Never let E&O lapse, even briefly, and never accept a retroactive date that is later than your earliest paid work without understanding what you give up.
Claims-made trigger
The policy in force when the claim is first made, and reported, is the one that responds, not the one in force when the work was done.
Why it matters: A lapse or a missed reporting deadline can leave past work uninsured.
Retroactive date
The earliest date of work the policy will cover. Claims about earlier work are generally excluded. See retroactive date.
Why it matters: Moving to a new carrier with a later date can cut off older projects.
Prior acts coverage
Coverage for work done before the current policy began, usually shown as the retroactive date going back to day one. See prior acts coverage.
Why it matters: Ask for full prior acts when you switch carriers so history carries over.
Known circumstances
Insurers exclude problems you already knew about when you applied. Report anything that might become a claim.
Why it matters: A notice of circumstances can lock a known issue into the current policy.
Why it matters: It matters when you sell the company, shut down or change coverage type.
Limits and defense
Limits, retentions and defense inside limits
Short answer: on most E&O policies, defense costs are inside the limit, which means every dollar spent on lawyers reduces the money left to settle or pay a judgment. Check whether your policy works this way, and what the retention is, before you pick a limit.
Feature
What it does
What to look for
Per-claim limit
The most the policy pays for one claim
Compare it with the largest contract you hold and what a failure could cost the client.
Aggregate limit
The most the policy pays for all claims in the policy period. See aggregate limit.
Several claims from one problem may share it.
Defense inside limits
Legal fees reduce the limit available for settlements
Defense outside limits is more generous and costs more. Ask what is offered.
Retention
The amount you pay before the insurer does. See retention.
A higher retention lowers premium but needs cash on hand.
Consent and hammer clause
Controls whether the insurer can settle without you, and what happens if you refuse. See consent to settle and hammer clause.
You want a say in settlements that affect your reputation.
Sublimits
Lower limits for specific kinds of claims. See sublimit.
Look for them on regulatory matters, contractual liability and certain services.
Many companies choose the limit by working backward from the contract. If your master agreement asks for a stated minimum, that is the floor. Above the floor, consider how much your largest client could lose if your work failed and what it would cost to defend a dispute of that size. Your insurer will also ask about your largest engagements.
Ask for these
Policy enhancements worth asking about
Two E&O policies with the same limit can respond very differently. These are the features we raise most often, in plain terms. Availability depends on the insurer and your profile.
Contractual liability carve-back
Preserves coverage for liability you would have had even without the contract.
Why it matters: It narrows the most common exclusion contract-heavy companies run into.
Broad definition of services
Describes everything you sell, including consulting, training, support and software, in one definition.
Why it matters: A claim can only be covered if the work behind it is.
Subcontractor and contractor errors
Extends coverage to work you outsource, when you are legally responsible for it.
Why it matters: Clients treat outsourced work as yours, and so should the policy.
Full prior acts
Sets the retroactive date at your first paid work, or unlimited prior acts where available.
Why it matters: It keeps early customers covered when you change carriers.
What happenedA consultancy agreed to deliver a system by a fixed date. The work slipped, and the client said it lost a season of sales.
The claimNegligence and failure to deliver, with a demand for lost revenue.
What respondedE&O funded the defense and a negotiated resolution, after the retention. Fee credits the company offered voluntarily were not covered.
Scenario 02
The integration that broke billing
What happenedA software company’s update disrupted a customer’s invoicing for several days.
The claimThe customer alleged lost income and extra costs from the failure.
What respondedTech E&O, because the policy covered failure of the software services. A standard professional liability form might have asked more questions.
Scenario 03
The campaign that missed its promise
What happenedAn agency promised a measurable result in its proposal. The campaign underperformed, and the client withheld payment and demanded damages.
The claimBreach of contract and negligent performance.
What respondedIt depended on the wording. Defense was often available, but a guarantee of a specific result raised exclusion questions.
Scenario 04
The analysis acted on too quickly
What happenedA financial data provider delivered a model with an error in its inputs. A client relied on it for a decision.
The claimNegligent advice and errors in a deliverable.
What respondedE&O paid defense. Because the claim was made after a carrier change, the retroactive date decided whether the work was covered.
Scenario 05
The subcontractor’s mistake
What happenedA services company used an outside developer for part of a project. The developer’s error caused the client a loss.
The claimThe client sued the company, not the contractor.
What respondedCoverage turned on whether the policy extended to subcontracted work and what the contract with the developer required.
Scenario 06
The indemnity nobody read
What happenedA vendor signed an enterprise agreement with a broad indemnity. A third party later sued the customer over something connected to the vendor’s work.
The claimThe customer demanded indemnification under the contract.
What respondedOnly the part that matched the policy’s coverage. The rest was a contractual liability question, which is why the clause should have been reviewed first.
Scenarios are illustrative composites based on common claim patterns, not specific Alton Risk clients.
Reading the contract
How to read the insurance clause in a customer contract
Short answer: find the insurance section, list every policy it names, and match each one to a limit, a period and any special wording. Most delays come from a mismatch in names or endorsements, not from missing coverage. Our blog post on enterprise contract insurance requirements goes deeper, and our guide to what clients and lenders require on a certificate covers the paperwork.
What policy names does it use?
Contracts may say E&O, Professional Liability, Tech E&O or Technology Errors and Omissions. They are often the same coverage under different names.
Why it matters: Confirm with your broker so the certificate matches the words the customer uses.
What minimum limits and how are they counted?
Look for per-claim and aggregate amounts and whether they apply separately to each policy.
Why it matters: A contract may require a minimum you do not yet carry.
Does it require a retroactive date or tail?
Some customers require continuous coverage for a period after the contract ends.
Why it matters: That affects how you handle renewals and switching carriers.
Does it ask for additional insured or waiver of subrogation?
These are common on general liability, but less common or not available on some E&O forms.
Why it matters: Ask early. Not every endorsement is available on every policy.
Who must give notice, and of what?
Some agreements require notice of cancellation or non-renewal to the customer.
Why it matters: Missing a notice duty can be its own breach, even if coverage is fine.
Pricing
What drives the cost of E&O, and what moves the price?
Short answer: price follows how much damage your work could do to a client and how likely it is to go wrong. Two companies selling similar services can land far apart, because underwriters price the contracts, the client base and your delivery controls, not just your revenue.
Factor
Why it moves your premium
Revenue
More revenue usually means more clients and more work that can go wrong.
Services and industry
Advice with direct financial effect, financial services work and AI deployments often carry higher pricing and fewer carriers.
Contracts and client size
Large customers, uncapped liability, SLAs and broad indemnities raise exposure.
Size of the work
The more a failure could cost the client, the more the underwriter worries about severity.
Controls and quality processes
Written scopes, review and testing, change control and clear client sign-off signal lower risk.
Claims and incident history
Past claims and known problems are priced in directly. A loss run helps. See loss runs.
Limits, retention and extras
Higher limits cost more, a higher retention lowers premium, and each endorsement can adjust price.
Getting covered
How to get E&O quoted and bound without delay
Straightforward companies can often be quoted quickly. Complex ones take longer. Having the information underwriters ask for ready is the biggest thing you control.
What to have ready
Your legal entity name, subsidiaries and a description of every service you sell.
Revenue by service line and a forecast for the coming year.
Your standard contract or master services agreement, and the insurance clause from any customer agreement you are negotiating.
Your largest clients and engagements, and any with unusual terms.
Use of subcontractors and how you contract with them.
Any claims, complaints or disputes in the past few years, plus your prior policy and loss runs.
How you manage quality: scoping, testing, change approval and client sign-off.
Is a certificate of insurance the same as the policy?
No. A certificate shows coverage exists and summarizes it. The policy and its endorsements govern a claim. See certificates of insurance.
Why it matters: Customers may ask for the policy or key endorsements, so request them early.
What delays a bind most often?
An incomplete application, a pending dispute nobody mentioned, naming the wrong entity and starting during a customer deadline.
Why it matters: Each is avoidable with a short review before the paperwork request arrives.
What mistakes cost companies the most?
Letting a policy lapse, comparing premium without comparing exclusions, and signing a contract with promises the policy does not support.
Why it matters: The cheapest quote is the one most worth reading line by line.
From the carrier’s side of the table
What underwriters ask before they quote
Having underwritten these risks on the carrier side, we know an E&O submission is won or lost on how clearly it answers the questions an underwriter is already asking. A well-prepared submission gets more carriers interested, and more interest is what moves price and terms.
Exactly what you sell, in the words a customer would use, and what percentage of revenue each service brings in.
Your contract terms, including liability caps, SLAs, indemnities and warranties.
Your largest customers and the stakes of the work you do for them.
How you deliver, including quality checks, testing, documentation and use of subcontractors.
Any claim, dispute or complaint, disclosed up front rather than discovered later.
For AI and fintech companies, how outputs are validated, what decisions customers make from them and which regulated activities are involved.
Self-audit
Seven questions to ask about your current E&O policy
Does the definition of professional services describe everything you actually sell?
Does the policy carve back liability you would have had without the contract?
Is your retroactive date as early as your first paid work, or at least early enough for your current clients?
Do you know whether defense costs sit inside or outside the limit, and what your retention is?
Do your limits meet the minimums in your largest customer contracts?
Are contractors and subcontractors you rely on addressed in the wording?
Do you know what you would do about tail coverage if you were acquired or closed next year?
If you can’t answer yes to all seven, send us your policy and we will review it line by line.
Are E&O and Professional Liability the same thing?
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Yes, two names for the same coverage. Both protect you against claims that your professional services, advice, or work caused a client financial harm. Industry convention drives the label: tech, financial, and real-estate firms say E&O; consultants, accountants, architects, and agencies say Professional Liability; licensed professions say Malpractice. Scope and limits matter, not the heading.
What does E&O insurance cover?
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Defense costs, settlements, and judgments when a client alleges financial loss from your work, mistakes, missed deadlines, negligence, failure to deliver, or bad advice, and it pays defense even when the claim is groundless. It does not cover bodily injury or property damage (General Liability), data breaches (Cyber), or intentional/fraudulent acts.
What's the difference between E&O and General Liability?
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General Liability covers physical harm, meaning third-party bodily injury and property damage. E&O covers financial harm from your professional services or advice. They address different risks, and most service and technology businesses need both.
How is E&O different from Tech E&O and Cyber?
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Tech E&O is E&O tailored to technology companies, so it also responds to product failures, outages, and missed SLAs. Cyber is a separate line for security incidents such as breaches, ransomware and unauthorized access, and the resulting costs and liability. E&O answers "our work failed"; Cyber answers "our systems were breached." Many tech companies carry both.
Why does claims-made coverage matter for E&O?
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Most E&O is claims-made: it responds based on when the claim is filed, not when the work was done, and only if a policy is in force with a retroactive date reaching back to that work. Gaps, carrier switches, and winding down without "tail" coverage can leave past work uninsured. We manage retroactive dates and tail options so your coverage history stays intact.
Do contracts require E&O insurance?
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Often. Enterprise customers, master service agreements, and government contracts frequently require E&O / Professional Liability at minimum limits (commonly $1M to $2M), and investors check for it in diligence. If your contract says "E&O" and your policy says "Professional Liability," that's generally the same coverage, we confirm scope and issue certificates quickly.
How much E&O limit does a company need?
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It depends on your contracts and the size of the work. Start with the minimums in your largest customer agreements, then consider how much a client could lose if your work failed and what a dispute of that size would cost to defend. Many enterprise agreements ask for $1M to $2M, and some ask for more. We benchmark before quoting.
Does E&O cover mistakes made by employees?
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Generally yes, when they are acting within their jobs, because the policy covers the company for its professional services, including the people who deliver them. Whether contractors and subcontractors are included depends on the wording, so ask. Deliberate wrongdoing by an employee is typically excluded.
What happens if we don’t have E&O insurance?
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You pay for the defense and any settlement yourself, and defending even a baseless claim can be expensive. Missing coverage can also block deals, because many customers require proof of it before work begins. Some contracts treat a missing policy as a breach on its own.
Does E&O cover breach of contract?
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Partly. E&O generally responds when a client says your professional work was negligent or fell short, even if they frame it as a contract dispute. It usually does not cover liability you assumed only by signing, such as guarantees, fee refunds or agreed penalties. A contractual liability carve-back can help. Counsel can advise on a specific dispute.
What is a retroactive date on an E&O policy?
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It is the earliest date of work the policy will cover. A claim about work done before that date is generally excluded, even if the policy is in force when the claim arrives. When you change carriers, ask for the retroactive date to stay as early as your first paid work so past projects remain covered. See retroactive date.
Are defense costs inside or outside the limit on E&O?
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On many E&O policies, defense costs erode the limit, which means legal fees reduce the amount left to settle a claim or pay a judgment. Some forms offer defense outside limits or a separate defense allowance. Ask which one you have, because it changes how far a limit really goes.
Does E&O cover regulatory investigations?
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Sometimes, and usually with limits. Standard E&O is built around client claims, so regulatory proceedings may be excluded, sublimited or covered only when tied to a client claim. If your work touches regulated activity, ask how the policy defines a claim and whether it includes regulatory matters.
Does E&O cover AI outputs and model errors?
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It depends on the policy wording. Some forms cover technology and AI services while others exclude AI-specific claims or require special endorsements. If you sell or build with AI, ask how the policy treats model output errors, and see our guide to AI liability coverage.
What is the difference between claims-made and occurrence coverage?
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An occurrence policy responds to harm that happens while the policy is in force, even if the claim comes later. A claims-made policy responds to claims first made, and reported, while the policy is in force, subject to the retroactive date. E&O is almost always claims-made, so continuity is critical. See claims-made policy.
Does E&O cover work done by subcontractors?
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It can, but not automatically. Clients usually hold you responsible for work you outsource, so the policy should address it. Check the wording, and compare it with the contract you have with the subcontractor, including whether they carry their own coverage.
How can a company reduce the chance of an E&O claim?
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Write clear scopes and deliverables, avoid promising results you cannot control, keep change requests in writing, test before delivery, document client approvals and communicate early when a project slips. Reviewing contracts before signing also helps. Better controls can improve how underwriters view you, though they do not prevent every claim.
What E&O coverage do we need if we wind down?
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Claims about past work can arrive after you close, and a claims-made policy ends when you stop paying for it. Tail coverage, also called an extended reporting period, extends the time to report claims. Arrange it before you cancel. See winding down and tail coverage.
Most companies never read their E&O until the day a client complains. We review your current policy against your contracts, your services and the exclusions underwriters are adding this year, then tell you plainly what we would change.
Written by Sophia Zaller of Alton Risk. Before founding Alton Risk, Sophia spent four and a half years as a carrier-side underwriter, building specialty programs for digital asset, AI and emerging technology companies.
