We use analytics cookies to understand how the site is used and improve it. No tracking runs until you allow it. See our Privacy Policy.
When a client says your advice or work cost them money, E&O pays for the defence and the settlement.
Get a quoteIn short
Professional liability insurance, also called errors and omissions (E&O), pays to defend your business and settle the claim when a client says your advice, design, report or service was negligent and cost them money. It covers financial loss, not injury or property damage. In Canada it is almost always written on a claims-made basis, so the policy in force when the claim is made, not when the work was done, is the one that responds.
Last reviewed
Professional liability insurance, also called errors and omissions (E&O), protects businesses that are paid for advice, designs, reports and professional services. If a client alleges your work was negligent and caused them a financial loss, it funds your defence and pays damages or a settlement, even when the claim has no merit. It sits beside general liability, which covers injury and property damage.
Most E&O problems are not about having no policy. They come from a retroactive date lost when switching insurers, defence costs that eat the limit, a contract that promised more than the policy covers, or a practice closed without tail coverage. We set up E&O to avoid those outcomes, matched to your services, your contracts and any regulator requirements. Consultants can start with our guide to E&O for consultants; health practitioners should see malpractice insurance.
E&O responds to one kind of allegation: that you did your professional work badly, or failed to do something you should have, and a client or third party lost money because of it. The loss is usually pure financial loss, such as a missed deadline, a flawed recommendation or a design that has to be redone.
What it does not cover is just as important. E&O is not a guarantee of results, a warranty of your fees, or cover for someone tripping in your office. A slip and fall or damage to a client's property belongs on your commercial general liability policy. Our article on CGL vs. professional liability sorts the common claims into the right policy.
Any business that is paid for what it knows, recommends or designs. That includes:
Health and wellness practitioners need the clinical version of this cover, which is set out on our malpractice insurance page. Professional services firms that want E&O packaged with property and liability can start from our business and professional services package.
Most liability policies are occurrence-based: they respond to injury or damage that happens during the policy period, however late the claim arrives. E&O almost never works that way. It is claims-made, and three dates decide whether a claim is covered.
| Date | What it means | What goes wrong |
|---|---|---|
| Retroactive date | The earliest date of work the policy will cover. Work done before it is excluded. | Switching insurers and accepting a new retro date wipes out cover for all your past work |
| Claim made date | When a written demand, suit or allegation first reaches you. It must fall inside the policy period. | A claim made after the policy lapses is not covered, even if the work was done while insured |
| Reporting date | When you notify the insurer. Most wordings require notice during the policy period or a short window after it. | Late notice can let the insurer deny an otherwise covered claim |
The practical rule: keep continuous coverage with an unbroken retroactive date, and carry it forward every time you renew or move insurers. A retro date that matches the day you started practising is the strongest position.
Many policies also let you report a circumstance, such as an angry client email or a mistake you have spotted, before it becomes a claim. Once reported, a later claim from that circumstance is treated as made during the policy in force when you gave notice. Report early. It costs nothing and it locks in the cover.
An E&O policy usually carries a per-claim limit and an annual aggregate. A $1,000,000 per claim and $2,000,000 aggregate policy pays at most $1,000,000 on any one claim and $2,000,000 for all claims in the year.
Check how defence costs are treated. Many professional liability forms put defence inside the limit, sometimes called an eroding or burning limit: every dollar spent on lawyers reduces what is left to pay a settlement. A long defence can consume a large share of a modest limit before the case is resolved. Some insurers offer defence outside the limit, or a separate defence limit, which is worth comparing when quotes are close.
Because claims-made cover ends when the policy ends, retiring, closing, merging or selling a practice creates a gap. Claims about your past work can still arrive, and Ontario's Limitations Act, 2002 helps explain why. The basic limitation period is two years from the day the claim was discovered, not from the day the work was done, and the ultimate limitation period is 15 years from the act or omission. An error that comes to light years later can still lead to a suit.
An extended reporting period, often called tail coverage, keeps the right to report claims about past work open after the policy ends. Most insurers offer it for a set period at a percentage of the expiring premium, and the offer usually has to be accepted within a short window after cancellation. Some regulators set their own run-off rules. If you are buying a practice, ask whether the seller has arranged a tail or whether your policy will pick up the seller's prior work.
Every E&O wording has an exclusion section. These are the ones that most often surprise firms, and where the cover actually comes from.
| Excluded or limited | How to cover it |
|---|---|
| Bodily injury and property damage | Commercial general liability coverage |
| Data breach, privacy and network security claims | Cyber liability and privacy breach coverage |
| Defamation and intellectual property infringement | Media liability coverage, or a media extension on the E&O |
| Claims against your directors for running the company | Directors and officers liability |
| Employee theft of client funds | Commercial crime coverage, including third-party or client property cover |
| Contractual liability beyond your duty of care, such as guarantees, penalties and indemnities | Negotiate the contract to a negligence standard; the insurer will not take on promises you made beyond it |
| Work before the retroactive date | Prior acts cover, by keeping your original retro date at renewal or when you change insurers |
| Fee disputes and return of fees | Not insurable; managed through clear engagement letters |
| Dishonest, fraudulent or criminal acts | Not insurable for the person who committed them; innocent partners may keep cover under some wordings |
Many firms buy E&O for the first time because a client contract demands it. Government, institutional and corporate clients routinely ask for a minimum per-claim limit, proof by certificate of insurance, notice of cancellation, and coverage maintained for a period after the work ends. Read that last term carefully: on a claims-made policy it means keeping continuous cover, or buying a tail, for the stated period. Our guide on why contracts ask for a certificate of insurance explains what each request means.
Some professions also face mandatory insurance set by law. Three Ontario examples we have checked against the current rules:
| Profession | Rule | Minimum set |
|---|---|---|
| Architects | Architects Act, R.R.O. 1990, Reg. 27, s. 48: members and certificate of practice holders must be insured against errors and omissions through the insurer named under the Act, unless exempt | Per claim, $250,000, $500,000 or $1,000,000 depending on the practice's gross fees for architectural services in the previous financial year |
| Real estate agents and brokerages | RECO: all registrants must participate in the insurance program as a requirement of registration under the Trust in Real Estate Services Act, 2002 | Program covers errors and omissions, commission protection and consumer deposits |
| Mortgage brokerages | O. Reg. 408/07 under the Mortgage Brokerages, Lenders and Administrators Act, 2006: a licensed brokerage must have errors and omissions insurance, with extended coverage for fraudulent acts, or another approved assurance | $500,000 per occurrence and $1 million for all occurrences in a 365-day period |
Other regulated professions, including lawyers, accountants and engineers, have their own programs or rules that vary by province and by type of practice. A regulator's minimum is a floor, not a recommendation. We confirm the current rule with your regulator before we place cover.
These are the two policies most often confused, and most service firms need both.
| Professional liability (E&O) | Commercial general liability (CGL) | |
|---|---|---|
| What it responds to | Financial loss from your professional advice or services | Bodily injury, property damage and personal injury to third parties |
| Typical claim | A client loses money after relying on your report, plan or code | A visitor slips in your office, or you damage a client's equipment |
| Trigger | Claims-made, with a retroactive date | Usually occurrence-based |
| Defence costs | Often inside the limit | Usually outside the limit |
| Who usually asks for it | Clients, regulators and procurement teams | Landlords, venues and general contractors |
A two-person IT consultancy recommends and configures a cloud migration for a distribution company. Months later, the client says a configuration error caused a week of order-processing failures and lost sales, and its lawyer sends a demand letter.
The consultancy's E&O policy has a $1,000,000 per-claim limit with defence inside the limit, a $5,000 deductible, and a retroactive date matching the day the firm opened. The demand arrives during the current policy period and the firm reports it the same week, so the claim falls squarely inside the policy.
The insurer appoints defence counsel and an expert to review the configuration. Defence costs reduce the limit as they are spent, so a long dispute leaves less for any settlement. The firm pays the deductible; the insurer funds the rest of the defence and any settlement up to the remaining limit.
Now change one fact. Suppose the firm had switched insurers the year before and accepted a new retroactive date. The migration work predates that date, so the new policy excludes it, and the old policy has expired. The same claim is uninsured. That is why we treat the retro date as a term to protect at every renewal.
E&O is rated on what you do and how much of it you do, not on property values. Underwriters look at:
The market is currently softening for this class. Marsh's Global Insurance Market Index put Canadian financial and professional lines rates down 4% in the third quarter of 2026. That is a useful moment to raise a thin limit or move defence costs outside the limit without a large premium jump.
Insurabiz is an independent brokerage working only in business insurance. We do not work for one insurer, so our job is to match your services and contracts to a wording that responds when it is needed.
E&O often sits alongside general liability, cyber and office contents. See bundle and save for how we package them, or request a quote.
Our claims team works with you and the insurer from the first notice to resolution.
Good to know
Sources
This page is general information, not insurance or legal advice. Coverage depends on your policy wording and the insurer. Speak with a licensed broker about your situation.
Insurer partners
We shop these partners to find the right coverage and price for you.
Professional Liability (E&O) Insurance
Compare 17 insurers, no obligation
Speak with an advisor
A fast, no-obligation quote from Canada's commercial insurance specialists. Real advice, the whole market compared, and someone who picks up the phone.