What Is Professional Liability (E&O) Insurance?
Professional Liability Insurance — also called Errors & Omissions (E&O) insurance — protects your business when a client claims that your professional services, advice, or work caused them financial harm. It covers the cost of defending yourself in court plus any resulting judgments or settlements, even if the claim turns out to be completely without merit.
This is distinct from general liability insurance, which covers bodily injury and property damage. If your mistake, oversight, or missed deadline costs a client money, general liability won't help you — professional liability will.
Critical distinction: General liability insurance does NOT cover claims arising from your professional work or advice. If a client sues you for a mistake in your services — not a physical injury — you need professional liability coverage. Without it, you're defending that lawsuit entirely out of pocket.
Negligence Claims
Defense costs and settlements when clients allege your work fell below professional standards.
Errors & Omissions
Coverage for mistakes, oversights, or failures to deliver services as promised.
Missed Deadlines
Claims arising from project delays or failures to meet contractual timelines.
Misrepresentation
Protection when clients claim they relied on inaccurate information you provided.
Defense Costs
Legal fees, expert witnesses, and court costs — even for claims you ultimately win.
Settlements & Judgments
Payment of court-ordered damages or negotiated settlements on your behalf.
Which Illinois Professionals Need E&O Coverage
Any business that provides a service, gives advice, or produces work product for clients faces professional liability exposure. Common industries include:
General Contractors
Design-build projects and construction management services.
IT & Tech Firms
Software errors, system failures, and tech consulting work.
Consultants
Business, financial, HR, and management advisory services.
Real Estate Professionals
Agents, property managers, and appraisers face frequent E&O claims.
Architects & Engineers
Design errors and specification mistakes can lead to costly claims.
Marketing & PR Agencies
Campaign failures, missed deliverables, and copyright claims.
Professional Liability Insurance Costs in Illinois
Professional liability premiums for most Illinois businesses range from $500 to $5,000 per year for $1M in coverage. Your premium depends on your industry, annual revenue, years in business, claims history, and the specific services you provide.
Higher-risk professions such as engineering, architecture, and financial advising will typically see higher premiums. Many client contracts and state licensing requirements now mandate E&O coverage before you can work — making it a cost of doing business regardless.
Professional Liability FAQs
Authoritative Sources
1 Illinois Department of Insurance — Commercial Lines: insurance.illinois.gov
2 Illinois Design Professionals — Licensing & Requirements, ILCS 225: ilga.gov
3 Insurance Information Institute — Professional Liability: iii.org
Last Updated: February 2026