Professional liability covers a negligent act, error, or omission in the services someone is paid to perform, where the result is a financial loss to their client. No injury, no physical damage — just money the client didn't get back. General liability does not cover it, and on many classes the CGL carries an outright professional services exclusion.
Below is what to check on every quote. Two quotes at the same limit and a similar price are routinely very different products, and every item here is a place that difference hides.
1. Claims-made or occurrence — and the retroactive date
Nearly all E&O is claims-made. The policy responds to claims first made during the term, not to work done during it. The retroactive date sets how far back prior work is picked up.
Check: does the new policy carry the expiring policy's retroactive date, or full prior acts? Resetting it to inception can erase years of coverage without any gap in premium.
2. Defense inside or outside the limit
Inside means defense costs erode the limit — $300,000 of defense on a $1,000,000 policy leaves $700,000 to settle with. Outside means the limit stays whole.
Check: which one, and whether an "outside" form caps defense at some multiple before it starts eroding.
3. The deductible or retention — and what it applies to
On many E&O forms the deductible applies to defense costs as well as damages, so the insured funds the first dollars of their own defense. Some forms use a self-insured retention the insured must actually pay before the carrier's duty is triggered.
Check: damages-only or damages-and-defense, and whether it is a deductible or a true retention.
4. Consent to settle and the hammer clause
Many professional liability policies require the insured's consent before the carrier settles, because a settlement is an admission that affects a professional's reputation. The hammer clause is what happens when the insured refuses: if they decline a settlement the carrier recommends, the carrier's obligation is capped at what it would have paid, and the insured owns everything above it.
Check: whether there is a soft hammer — a shared percentage split, commonly 50/50 or 80/20 — instead of a full one. On an eroding-limit policy this matters twice over.
5. The definition of professional services
Coverage only reaches what the policy defines as professional services. A definition written for one line of work will not respond to a new one.
Check: does the wording match what the client actually does today, including anything added since the last renewal?
6. Extended reporting period
When a claims-made policy ends, past work has nothing responding to it unless tail coverage is bought.
Check: how long the option lasts, what it costs as a percentage of the expiring premium, and whether it is available on cancellation as well as nonrenewal.
What to put in writing when you present the quote
Whichever way each item lands, say so in the email that carries the quote. Most E&O complaints against agents on professional liability accounts come down to a client who found out about the eroding limit or the reset retroactive date after a claim rather than before binding.
Related: Defense outside the limit · Defense inside the limit · Claims-made and the retroactive date · CGL vs professional liability
Educational only — confirm against the actual policy form, endorsements, and declarations.