Professional liability insurance (PLI), more commonly known as errors and omissions (E&O) insurance protects professionals and companies that provide advice or service from bearing the full cost of defending against a negligence claim made by a client, including any damages awarded.
Basically, if you provided incorrect or incomplete advice to a client and they incurred a loss as a result, you could be sued. PLI covers the related costs — legal fees (including when the action turns out to be groundless), as well as settlement or awarded damages.
PLI may take on different forms and names depending on the profession, especially medical and legal, and is sometimes required by law and/or under contract by other businesses. Costs associated with criminal prosecution, as well as civil actions not included in the policy, are excluded from coverage.