I left my agency job to freelance. Three of my old clients followed me. My former boss slapped me with a lawsuit for “Breach of Non-Solicitation” and “Tortious Interference.” I called my E&O agent, expecting help. They hesitated.
Key Takeaways
- Employment Practices vs. Professional Liability: Stealing clients is an employment dispute, not a “coding error.” Standard E&O often excludes claims related to your status as an employee or disputes with former employers.
- “Intentional Acts”: The boss alleges you intentionally solicited them. Intentional acts are excluded.
- IP Claims: If they sue for “Stealing Trade Secrets” (your code snippets), E&O might cover the IP defense, even if they deny the non-compete defense.
- Legal Defense Fund: Some policies offer a small sub-limit for “Disciplinary Proceedings” or contract disputes, but it’s rare for this scenario.
The “Why”: The Scope of Coverage
The Trap: E&O covers you for hurting your clients.
It generally does not cover you for hurting your competitors (or former bosses).
Unless the lawsuit includes an allegation of “Copyright Infringement” (e.g., “You stole our code to build their site”), E&O will likely deny coverage for a pure Non-Compete breach.
The Investigation: I Quoted 3 Major Carriers
1. Hiscox
- My Analysis: Their policy explicitly excludes claims arising from “employment disputes” or “unfair competition.” They will likely deny this claim.
2. Markel
- My Analysis: They have a broad “Personal Injury” definition that might cover “Tortious Interference” defense costs, but it’s a long shot.
3. LegalShield (Not Insurance)
- My Analysis: This is where prepaid legal plans shine. E&O won’t save you, but a business legal plan can draft the response letter arguing the non-compete is unenforceable.
[IMAGE: Screenshot of a “Non-Solicitation” clause in an employment contract]
Comparison Table: Non-Compete Defense
| Carrier | Covers Non-Compete? | Covers IP Theft Allegation? | Best For… |
| Hiscox | No | Yes | Design/Tech |
| Markel | Unlikely | Yes | Consultants |
| LegalShield | Yes (Consultation) | No (Damages) | Contract Disputes |
Step-by-Step Action Plan
- Check the Allegations: Are they suing for “Breach of Contract” (Excluded) or “Copyright Infringement” (Covered)?
- Notify Carrier Anyway: Let them do the coverage analysis. If there is one covered allegation in the suit, they often have to defend the whole thing.
- Hire Personal Counsel: Prepare to pay out of pocket.
- Check State Law: In 2026, many states (like CA, NY, MN) have banned non-competes. The lawsuit might be frivolous.
FAQ
Does General Liability cover this?
No.
What if I didn’t sign a non-compete?
Then they are suing for “Common Law Duty of Loyalty.” Still an employment dispute.
Can I buy “Non-Compete Insurance”?
No, it doesn’t exist.