Professional Indemnity Insurance Calculator

Professional indemnity insurance (also called errors and omissions, E&O, or professional liability insurance) covers claims arising from professional mistakes, negligent advice, errors, or omissions that cause financial harm to a client. It covers legal defense costs and settlements or judgments up to the policy limit. It is a claims-made policy, meaning it covers claims made while the policy is in force, regardless of when the alleged error occurred.

Any professional who provides advice, services, or designs to clients for a fee should carry professional indemnity insurance. This includes consultants, accountants, architects, engineers, IT professionals, real estate agents, financial advisors, lawyers, and healthcare professionals. Many professional licensing bodies and client contracts require it as a condition of doing business.

Coverage should be sufficient to handle your largest single contract value or project scope, plus defense costs. Industry guidance suggests a minimum of 100 to 200 percent of annual revenue for most professionals, with higher limits for those in high-risk fields (medical, legal, engineering). Many contracts specify a required minimum limit, typically $1 million to $5 million.

A claims-made policy covers claims first made during the policy period, regardless of when the error occurred (subject to a retroactive date). An occurrence policy covers errors that occurred during the policy period, regardless of when the claim is filed. Professional indemnity is almost always written on a claims-made basis. Tail coverage (extended reporting period) is available to cover claims after policy cancellation.

The retroactive date is the date before which a claims-made policy will not cover losses, even if the claim is made during the policy period. The earlier the retroactive date, the broader the coverage. For a new business, the retroactive date is typically the policy inception date. Maintaining continuous coverage preserves the retroactive date and covers past work indefinitely.