Insurance Curator Professional liability insurance (Errors & Omissions, or E&O) protects professionals and firms from allegations of negligent acts, errors, or omissions in the services they provide. If you operate in the United States — whether in New York City, Los Angeles, Chicago, Houston, or Miami — knowing how to report a claim quickly and correctly is essential to protect coverage and minimize financial and reputational damage.
Below is a practical, step-by-step guide for reporting an E&O claim, what to expect from the insurer, and how to manage costs and litigation exposure.
Quick facts & pricing context (USA-focused)
- Typical E&O policy structure: $1,000,000 per claim / $2,000,000 aggregate is common for small to mid-size professionals.
- Typical annual premiums (examples, U.S. metro ranges):
- Small professional consultants in Phoenix or Dallas: $800–$2,000 for $1M/$2M.
- New York City or San Francisco consultants with higher exposure: $1,500–$4,000.
- Larger firms / higher-risk professions: $5,000–$20,000+.
- Insurers providing frequent E&O options include Hiscox, Chubb, Travelers, and CNA. Hiscox promotes online small-business E&O policies that can start at low hundreds annually for simple firms; larger carriers (Chubb/Travelers) tend to price higher for more tailored, higher-limit accounts.
Sources: Hiscox, Insurance Information Institute, NerdWallet (see Sources section below).
High-level timeline after an incident
- Incident or allegation occurs (day 0).
- Immediate internal response and document preservation (day 0–2).
- Report to insurer / notice of claim (ideally within 24–72 hours, per policy).
- Insurer acknowledges receipt & assigns claims adjuster (days 1–10).
- Coverage investigation & defense counsel selection (days 7–30).
- Ongoing defense / settlement negotiations (weeks–months).
- Claim resolution (months–years).
See our internal checklist for immediate actions: A Checklist for Internal Response When a Professional Liability Insurance (Errors & Omissions) Claim Arises.
Step-by-step: How to report a claim (actionable)
Step 1 — Don’t panic; preserve evidence immediately
- Preserve all emails, contracts, work files, drafts, project notes, and communications related to the matter.
- Disable any automatic deletion on storage or email.
- Prepare a short incident summary: who, what, when, where, how much alleged damage.
Step 2 — Review your policy quickly (coverage trigger & reporting clauses)
- Confirm the policy period, retroactive date, limits, deductible/retention, and notice provisions.
- Many U.S. E&O policies require notice “as soon as practicable” or within a specified period (e.g., 60–90 days for some claims-made policies). Timely notice is critical.
Step 3 — Contact your broker or insurer immediately
- Notify your broker or the insurer’s claims phone line with a concise written notice. Use email AND the insurer’s online portal if available.
- Keep a record: date/time of call, name of adjuster, claim number.
Suggested notice items:
- Named insured, policy number, contact info.
- Short factual summary (don’t speculate).
- Attach relevant documents (complaint, demand letter, key communications).
Step 4 — Expect and manage the insurer’s investigation
- The insurer will assign an adjuster, request documents, and possibly reserve rights (i.e., issue a Reservation of Rights letter).
- Cooperate — but do not volunteer additional admissions. Provide facts, not opinions.
- If the insurer denies coverage or issues a reservation of rights, consult coverage counsel promptly. See: Bad-Faith Denials and Your Rights Under Professional Liability Insurance (Errors & Omissions).
Step 5 — Defense counsel appointment and management
- If the policy provides a defense, insurer may select counsel or consult your preferred counsel (depending on policy language).
- Engage with counsel early to coordinate strategy, discovery, and settlement authority.
- Track defense invoices and settlement authority carefully to avoid surprise costs.
For tactics and expectations on defense, read: Best Practices for Managing a Professional Liability Insurance (Errors & Omissions) Defense.
Step 6 — Settlement discussions, authority, and excess exposure
- Determine defense counsel’s settlement recommendations and insurer’s settlement authority.
- Understand your retention/deductible and any consent-to-settle provisions.
- If settlement exceeds policy limits, negotiate contribution with insurer and explore excess coverage if available.
Common pitfalls that can jeopardize coverage
- Late notice after a claim-made policy’s reporting period.
- Failure to preserve key documents or spoliation of evidence.
- Making admissions of fault in written communications.
- Settling without insurer consent where policy requires it.
Who pays what? Typical financials (illustrative)
| Item | Typical U.S. Range | Notes |
|---|---|---|
| Small E&O policy (1M/2M) — annual premium | $800 – $4,000 | Lower in Sun Belt (Phoenix, Dallas); higher in NYC, SF |
| Mid-market firm (1M/2M) — annual premium | $3,000 – $12,000 | Professional mix, revenue and claims history matter |
| Defense costs (early case) | $10,000 – $100,000+ | Depends on litigation posture and discovery |
| Typical settlement for small client disputes | $10,000 – $250,000 | Wide variance by profession and allegation |
Example carriers and typical positioning:
- Hiscox — known for small-business E&O with low-entry pricing (often a few hundred dollars/year for very small consultants) and online quoting: https://www.hiscox.com/small-business-insurance/errors-and-omissions-insurance
- Chubb — global carrier offering tailored E&O coverage for higher exposures; pricing often higher due to bespoke underwriting: https://www.chubb.com/us-en/business-insurance/professional-liability-insurance.aspx
- Travelers — large-market carrier with broad product offerings for U.S. businesses: https://www.travelers.com/business-insurance/professional-liability
(Price ranges are illustrative and will vary by state, firm revenue, claims history, and risk class. See Sources.)
Practical checklist: information to include when you report
- Policy number and named insured
- Date incident/claim was discovered
- Short factual summary (who/what/when/where/how)
- Names of claimants or adverse parties
- Any legal documents (complaint, demand letter)
- Estimates of alleged damages or claimed amounts
- Relevant contracts or engagement letters
- Contact person for the claim and legal counsel information
After reporting: governance & follow-up
- Hold a weekly internal status update with responsible partners.
- Keep secure backups of all documents related to the claim.
- Track insurer communications and deadlines.
- If you disagree with the insurer’s coverage position, seek independent coverage counsel quickly.
For in-depth decision criteria about settlement vs trial and defense strategies, review:
- Settlement vs Trial: Decision Criteria for Professional Liability Insurance (Errors & Omissions) Claims
- Common Defense Strategies Used in Professional Liability Insurance (Errors & Omissions) Litigation
Final tips (U.S. market)
- Report promptly; a short delay can be costly in coverage disputes.
- Keep communications factual; avoid speculative or emotional statements.
- Use your broker as an advocate — they can expedite claims handling with certain carriers.
- Budget for defense costs even if coverage looks clear; litigation can be expensive and protracted, especially in New York, California, Florida, Texas, and Illinois.
Sources
- Hiscox — Errors & Omissions Insurance (U.S.): https://www.hiscox.com/small-business-insurance/errors-and-omissions-insurance
- Insurance Information Institute — What is Professional Liability Insurance?: https://www.iii.org/article/what-is-professional-liability-insurance
- NerdWallet — Professional liability insurance cost guide: https://www.nerdwallet.com/article/small-business/professional-liability-insurance-cost