As a freelancer, your reputation is your business — and one unhappy client can put it at risk. If a client claims your work was late, wrong, or cost them money, they can sue you, even if you did nothing wrong. Errors and omissions (E&O) insurance, also called professional liability insurance, is the cover that protects you in exactly that situation.
This guide explains what E&O insurance covers, what it typically costs for freelancers, who needs it most, and how to choose the right policy — in plain English, without the jargon.
In this guide
What is E&O insurance?
E&O insurance covers the cost of defending you against claims that your professional work caused a client financial harm. That includes legal fees, court costs, and settlements or judgments if you are found liable. For many freelancers, it is the single most important business cover — more relevant day-to-day than general liability, which covers physical injury and property damage instead.
A key detail: E&O policies are usually claims-made, meaning they cover claims filed while the policy is active, for work done after the policy's retroactive date. If you cancel your policy and a claim arrives a month later, you may have no cover at all — which is why keeping continuous coverage matters, and why some freelancers buy "tail" coverage when they wind down.
What it covers (and what it doesn't)
A standard E&O policy typically covers:
- Professional mistakes — errors, omissions or negligence in the work you delivered, such as a typo in a report, a missed deadline, or faulty advice.
- Failure to deliver — a client claims you did not deliver what the contract promised.
- Misrepresentation — a client says you overstated what your work would achieve.
- Legal defense costs — even for claims that turn out to be groundless, which are common and still expensive to fight.
- Copyright and intellectual property claims — sometimes included, sometimes an add-on, worth checking if you create content.
It does not usually cover intentional wrongdoing, criminal acts, bodily injury or property damage (that is general liability territory), employee disputes, or fines and penalties. Read the exclusions before you buy — the cheapest policy is rarely the best if it excludes the exact risk you face.
Who needs it most
Any freelancer whose work a client relies on to make money can be sued, but the risk is highest for consultants, designers, developers, writers, marketers, accountants, coaches and IT professionals. If your clients are businesses rather than consumers, or if your contracts require you to carry professional liability cover, it is close to essential — many larger clients will not hire you without it.
Freelancers who also handle client data or systems should look at related cover too: our guide to business insurance for freelancers explains how E&O fits alongside general liability, and cyber insurance for small businesses covers data breaches and hacking incidents that E&O typically excludes.
What it typically costs
For most freelancers, E&O insurance is relatively affordable. Typical premiums range from roughly $300 to $1,000 per year for $1 million of cover, depending on your profession, revenue, claims history and location. Lower-risk work such as writing or graphic design tends to sit at the cheaper end; consultants, financial advisers and IT contractors usually pay more.
The main factors that move your price are your profession's claim risk, your annual revenue, the limit you choose ($500,000 vs $1 million vs $2 million), your deductible, and whether you have had claims before. Getting quotes from two or three specialist insurers or a broker who works with freelancers usually beats accepting the first quote.
How to choose a policy
- Match the limit to your clients — if you work with large companies, they may require $1 million or more; check your contracts.
- Check the retroactive date — it should be as early as possible, ideally covering all your past freelance work.
- Confirm defense costs treatment — ideally defense costs are paid in addition to the limit, not inside it.
- Look for worldwide cover if you serve clients in other countries.
- Compare deductibles — a higher deductible lowers the premium, but make sure you could actually pay it.
Finally, keep your policy continuous. A gap in coverage can reset your retroactive date and leave past work exposed — so if you switch insurers, make sure the new policy's retroactive date reaches back to your old one.
Frequently asked questions
Is E&O insurance the same as professional liability insurance?
Yes — the two names describe the same cover. "Errors and omissions" is the older term; insurers also call it professional indemnity insurance in the UK.
Do I need E&O insurance if I have an LLC?
An LLC protects your personal assets from business debts, but it does not pay your legal defense costs or settlements. E&O insurance fills that gap, and many clients still require it even from incorporated freelancers.
Can I buy E&O insurance for a single project?
Some insurers offer short-term or project-based policies, but annual cover is usually better value and avoids gaps between projects. Ask a broker if your work is very occasional.
Does E&O cover work I did before buying the policy?
Only back to the policy's retroactive date. When buying your first policy, try to get the earliest retroactive date the insurer will offer, so past work is protected.