Professional Liability Insurance
E&O limits and how they protect your practice
Professional liability (E&O) insurance protects against claims of negligence, errors, or failure to perform professional duties. Understanding your limits helps you match coverage to your risk exposure.
Professional liability policies typically use per-claim and aggregate limits. The per-claim limit is the maximum paid for any single claim, while the aggregate caps total payments during the policy period.
Unlike GL which is occurrence-based, most professional liability is written on a claims-made basis. This means the policy in force when the claim is made responds, not the policy in force when the alleged error occurred.
Defense costs are often included within limits (not in addition to limits), so a portion of your coverage pays legal fees. Some policies offer defense outside limits for additional premium.
Types of Coverage Limits
Per-Claim Limit
$1,000,000
Maximum paid for any single professional liability claim, including defense costs (unless your policy has defense outside limits).
Annual Aggregate
$2,000,000
Total maximum your policy will pay for all claims during the policy year.
Deductible/Retention
$1,000 - $25,000
Your out-of-pocket cost per claim before coverage kicks in. Higher deductibles reduce premium.
Extended Reporting Period (ERP)
1-6 years available
Optional coverage to report claims after your policy ends for errors made during the policy period.
Recommended Limits by Business Size
| Business Type | Recommended Limit |
|---|---|
| Solo practitioner | $500K/$1M |
| Small firm (2-10 professionals) | $1M/$2M |
| Mid-size firm (10-50) | $2M/$4M or higher |
| Large engagements/high-value work | $5M+ or project-specific |
Need help with your professional liability insurance?
Our licensed agents can help you understand your coverage options and find the right policy for your business.