2026 is shaping up to be a pivotal year for businesses, consultants, agencies, and service providers who rely on Errors & Omissions (E&O) coverage.
New exclusions, tighter underwriting, and shifting claim drivers mean that policies written just a year or two ago may no longer respond the way insureds expect. Understanding what’s changing now is critical to staying protected.
Why Professional Liability Is Under Pressure
Across industries, insurers are seeing higher claim frequency and severity tied to advisory services, technology reliance, and contractual disputes. As professional services become more complex, liability exposure follows.
Economic pressure has also increased client scrutiny. When projects miss deadlines, budgets, or expectations, professional liability claims are often the first response.
New Exclusions Emerging in 2026 Policies
Many carriers are quietly adding or expanding exclusions that significantly narrow coverage. Common areas seeing reduced protection include cyber-related professional services, regulatory compliance advice, and services involving artificial intelligence or automation.
In some policies, exclusions are written broadly enough that they overlap with core professional duties, creating coverage gaps that are not immediately obvious at binding.
Technology, AI, and Expanded Risk
As businesses integrate AI tools, automated decision-making, and advanced software into their services, professional liability exposure increases. Carriers are responding by limiting coverage for errors tied to system reliance, algorithmic outcomes, and data-driven recommendations.
Firms that advise clients using technology-enabled tools may face uncovered claims if their E&O policies have not been updated to reflect current operations.
Contractual Liability and Client Expectations
Contracts are driving claims more than ever. Indemnification clauses, performance guarantees, and service-level agreements are increasingly aggressive, especially in professional service engagements.
Many E&O policies exclude liability assumed under contract unless it would have existed absent the agreement. This makes contract review a critical part of professional liability risk management.
Claims Trends Insurers Are Watching
In early 2026, carriers are closely tracking claims involving misrepresentation, failure to deliver promised outcomes, and documentation gaps. Poor communication and lack of written scope clarification remain leading contributors to losses.
Claims tied to regulatory advice, licensing issues, and compliance failures are also increasing, particularly in heavily regulated industries.
Underwriting Is Becoming More Selective
Insurers are demanding more detail during underwriting, including service descriptions, revenue breakdowns, contract samples, and risk controls. Firms with vague submissions or outdated descriptions are facing higher premiums or limited terms.
Professional liability is no longer a “set it and forget it” policy. Active management is required to maintain strong coverage.
What an E&O Coverage Check Should Include
A proper E&O review should assess exclusions, retroactive dates, contract carvebacks, coverage definitions, and alignment with current services. It should also evaluate limits in light of claim severity trends and legal cost inflation.
Many businesses discover too late that their policy no longer matches how they operate.
How Skyscraper Insurance Helps
At Skyscraper Insurance, we work with professionals, agencies, and service firms to identify hidden E&O gaps before claims occur. Our coverage checks focus on real-world exposure, not just policy summaries.
We help clients restructure professional liability programs to reflect evolving services, emerging risks, and the realities of the 2026 claims environment.
Professional liability protection must evolve as fast as your business does.
