A mistake in the work
Something was done incorrectly — a calculation, a filing, a specification, a build, a set of numbers. The client says the error cost them money.
Moon Insurance Managers, Inc. · TDI license #5595
Professional Liability & Errors and Omissions Insurance in Houston, TX
The sentence that brings people here is rarely “I need professional liability”. It is a client saying your work cost me money. Professional liability insurance — errors and omissions, or E&O — is the coverage built for that allegation, whether it turns out to be right or not.
Nobody was hurt and nothing was damaged. That is exactly why the policy most businesses already hold does not answer it.
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If a client has already made a demand
Report it to your current insurer under that policy’s own reporting terms, and involve your attorney. Do not negotiate it quietly first and tell the insurer afterwards — on a claims-made policy that order can cost you the cover. Then call us on (281) 484-8320 and we will help you work through what the policy is asking for. Nothing about the dispute belongs in the form above.
What the allegation looks like
Four ways the same complaint arrives
The subject sounds abstract until you write down what clients actually say. It comes in four shapes, and every one of them is about money the client believes they lost because of your work.
Advice that turned out badly
A recommendation was followed and the outcome was worse than the client expected. Whether that is a professional failure or simply a bad result is precisely what gets argued about, and arguing about it costs money either way.
A missed deadline or milestone
Late delivery with financial consequences downstream — a permit window missed, a launch delayed, a filing out of time. Common, and frequently underestimated as an exposure.
A failure to perform
The work was not delivered, or not to the standard the engagement described. The line between this and an ordinary commercial dispute is one of the more contested parts of the subject.
Worth saying plainly: the policy is engaged by the allegation, not by whether you were actually wrong. Defending a claim you eventually win still costs money, and for most service firms that defense cost is the real exposure rather than the eventual payout.
Sources: TDI — professional liability insurance FAQ; NAIC — insurance for small business. Verified .
The oldest confusion here
Financial loss, not injury or damage
General liability answers bodily injury and property damage: a visitor slips, a crew damages a client’s wall. It is built around physical harm to a person or a thing.
This answers something different in kind. A consultant’s recommendation loses a client six figures; an engineer’s specification means a project has to be redone; an accountant’s error triggers a penalty. Nobody was injured and nothing was broken — and that is precisely why the general liability policy is not the answer.
Businesses that sell expertise rather than objects tend to have their largest uninsured exposure sitting exactly here, which is also why so many client contracts now name this coverage specifically.
The part that decides outcomes
Claims-made, and why the dates matter
Almost all professional liability is written claims-made, and it behaves differently from the occurrence policies most businesses are used to. Five moving parts do the work:
The retroactive date
How far back the policy will look. Work done before that date is generally outside it, which is why an unbroken retroactive date is one of the most valuable things a long-lived business owns and one of the easiest to lose while switching insurer.
When the claim is made
Generally the policy in force when the claim is first made against you responds — not the one in force when the work was done. That single fact is what makes continuous cover matter so much in this line.
When it is reported
Most forms require the claim to be reported within the policy period, or within a stated window. Sitting on a demand letter to see whether it goes away is a reliable way to lose cover that would have responded.
What you already knew
A circumstance the business is aware of when it applies is generally not something a new policy is expected to pick up. Prior knowledge questions on an application are asked for exactly this reason and are worth answering carefully.
Extended reporting
An option on many forms to report claims after the policy ends, for a stated period. It matters most when a business closes, is sold, or stops carrying the cover — the moment the exposure outlives the policy.
The practical upshot is that continuity is an asset. A business with ten unbroken years and an original retroactive date is in a materially better position than one that let a policy lapse for a month in year four — and the difference does not show up until a claim arrives about old work.
It follows that changing insurer is a moment to ask about the retroactive date rather than to assume it travelled. It also follows that stopping the cover when the work stops is rarely the right move, because the exposure outlives the engagement.
Who is asking for it
Contracts, portals and a licensing example
Most buyers arrive because somebody required it. Client contracts and vendor portals routinely name professional liability, set a limit, and sometimes go further — requiring a retroactive date no later than a stated point, evidence of continuous cover, or particular notice terms. Reading the whole clause matters more than meeting the number in it.
Regulators require it in specific places too. Texas publishes its own proof-of-financial responsibility requirement for certain insurance license holders, which is a concrete example of a regulator asking for this kind of cover. It is one occupation’s rule, set by the body that regulates that occupation — not evidence that any other profession carries an equivalent duty. If you hold a license, the requirement to check is your own board’s.
Source: TDI — proof of financial responsibility for license holders. Verified .
Where the question comes from
Who tends to need this
This is not a list of businesses we can place — appetite in this line is occupation-specific and that is a conversation, not a web page. It is a list of who typically finds themselves asking:
- Consultants and advisers, whose entire product is judgment.
- Design and engineering firms, where a drawing becomes a building.
- Accounting, bookkeeping and financial services, where a number becomes a filing.
- Marketing, staffing, IT services and other business-to-business service firms.
- Real-estate, inspection and property-services professionals.
- Software and technology companies, where a contract often names this alongside cyber.
The common thread is selling judgment, expertise or a deliverable whose failure shows up as somebody else’s financial loss.
A boundary worth knowing
When the incident was about systems
The dividing question is what caused whose loss. An allegation that the work or service failed is this page’s. But if the event was a breach, an intrusion, an encrypted network or an exposure of information, that is a different policy answering a different trigger — data and network incidents are handled there.
One incident can raise both. A defect in software that also exposes customer records is the standard example, and it is exactly why customer contracts increasingly require the two together rather than treating them as alternatives. A software, SaaS, MSP or IT firm working out which combination it actually needs should start at technology company insurance, which assembles the whole question rather than answering half of it.
Before binding
The questions that decide it
These forms vary more than almost anything else in a small commercial book. Two proposals at the same limit can behave completely differently, and these are the questions that expose it:
- How does the form define professional services — and does that definition match what you sell?
- What is the retroactive date, and does it match the one you already have?
- Do defense costs erode the limit, or sit outside it?
- What retention applies, and does it apply to defense as well as settlement?
- Who selects counsel, and can the business object to the choice?
- Is there a consent-to-settle provision, and what happens if you refuse a settlement?
- Are subcontractors and independent contractors inside the definitions?
- How are contractual liability and warranty allegations treated?
- What territory does the policy apply to, and where can claims be brought?
- Is there an extended reporting option, on what terms and for how long?
The first question on that list is the one people skip and the one that matters most. If the form’s definition of professional services does not describe what you actually sell, everything after it is academic.
No obligation
Start with what you sell, and to whom
Tell us what the business actually does for clients, how it is engaged, and whether a contract has set a requirement. If you already hold a policy, the declarations page tells us the two things that matter most — how your work is defined and what the retroactive date is. The phone is fastest: (281) 484-8320, or use the form below.
Monday to Thursday, 9:00 to 5:00; Friday, 9:00 to 4:00. 360 FM 1959, Houston, TX 77034. Policies written statewide — you do not have to be local.
E&O questions we get every week
Are professional liability and errors and omissions the same thing?
In everyday use, yes — professional liability (errors and omissions, or E&O) is one coverage with two common names, and different industries prefer different ones. What matters far more than the label is how a specific form defines the professional services it applies to, because that definition is what decides whether your work is inside the policy at all.
What kinds of claims can E&O insurance address?
Broadly, allegations that professional work, advice or a failure to perform caused a client financial loss — a mistake in the work, a recommendation that went badly, a missed deadline with consequences, or a service not delivered as described. Whether any particular allegation is covered depends on the actual form: its definitions, its exclusions, its dates and its conditions.
Do I need E&O if I already have general liability?
They answer different things and neither substitutes for the other. General liability answers bodily injury and property damage — someone was hurt, or something was damaged. This answers financial loss allegedly caused by the work itself, where nobody was physically harmed. A consultant whose advice cost a client money has a claim general liability was never built for.
What does claims-made mean for an E&O policy?
Generally, that the policy responding is the one in force when the claim is first made against you — not the one in force when the work was done — and that the claim usually has to be reported within the period the form requires. The retroactive date sets how far back the policy will look. Continuity between policies therefore matters a great deal, and a gap can be expensive in ways that only become visible later.
Can a client require professional liability insurance?
Routinely, and increasingly. Client contracts, vendor portals and public-sector procurement terms often set a limit, and sometimes also require notice terms, a retroactive date no later than a given point, or evidence of continuous cover. Read the whole insurance clause rather than the number in it. Some regulators require it for specific license holders as well — Texas publishes its own requirement for certain insurance licensees, which is one occupation’s rule and not a general one.
Does E&O cover a contract dispute, a refund, or the cost to redo work?
Often not, and this is one of the most common misunderstandings. Many forms exclude or limit the cost of performing or re-performing your own work, and a straightforward commercial dispute about fees is generally not a professional liability claim. The boundary between "we did the work badly and it cost you money" and "we disagree about the invoice" is exactly where these forms do their arguing — read the wording before assuming either answer.
What is the difference between E&O, cyber insurance and technology insurance?
E&O answers an allegation that the work or service failed and cost a client money. Cyber answers data, privacy and network-security events. Technology insurance is not a third coverage at all — it is the industry assembly question a software, SaaS, MSP or IT firm faces when a customer contract asks for both of the first two. One incident can raise both, which is why contracts often require them together.