Errors and Omissions Insurance

What Does Errors and Omissions Insurance Cover?

Errors and Omissions (E&O) Insurance provides financial protection for professionals and businesses against claims alleging inadequate work, negligence, or errors in the delivery of services. Coverage typically includes:

• Legal Defense Costs: Covers the legal fees, court costs, and expenses associated with defending against an E&O claim, regardless of whether the claim is valid.
• Settlement and Judgment Payments: Pays for settlements or judgments awarded to clients who file claims of negligence or inadequate work. This can include compensation for financial losses suffered by the client.
• Negligence Claims: Provides coverage for claims of errors, omissions, or failure to meet professional standards in the delivery of services.
• Misrepresentation: Covers claims arising from alleged misrepresentation or failure to provide accurate information that leads to a client’s financial loss.

E&O Insurance can be customized based on your industry—whether you are an accountant, consultant, or IT professional. Pairing E&O Insurance with General Liability Insurance provides more complete protection for your business, covering both professional errors and general risks.

Why Choose Errors and Omissions Insurance?

• Financial Protection: Professional errors or omissions can result in significant financial losses for clients. E&O Insurance helps cover the resulting claims, protecting your business from severe financial impact.
• Legal Support: This policy provides access to experienced legal representation to help you navigate the complexities of professional liability claims, ensuring you have support throughout the process.
• Client Confidence: Many clients require proof of E&O Insurance before agreeing to work with you. Having this coverage demonstrates your professionalism and commitment to handling client matters responsibly.
• Peace of Mind: E&O Insurance provides peace of mind, allowing you to focus on delivering quality services without worrying about potential liabilities from errors or mistakes.

E&O Insurance is particularly important for professionals providing specialized advice, consulting, or services. It works well alongside other policies like Professional Liability Insurance, which covers broader liability issues, and Cyber Liability Insurance for protection against cyber-related incidents.

Comparing Errors and Omissions Insurance to Other Liability Policies

Errors and Omissions Insurance is one of several types of liability coverage designed to protect businesses from specific risks. Here's how it compares to other policies:

• Professional Liability Insurance: Similar to E&O, Professional Liability Insurance provides coverage for claims of negligence or errors in professional services. The terms are often used interchangeably, but E&O is typically industry-specific, covering fields like accounting, consulting, and IT.
• General Liability Insurance: General Liability Insurance covers claims related to bodily injury, property damage, and personal injury. Unlike E&O, it does not cover professional errors or negligence but protects against incidents that occur during normal business operations, such as slip-and-fall accidents.
• Cyber Liability Insurance: Cyber Liability Insurance covers data breaches and other cyber risks. Combining E&O Insurance with Cyber Liability Insurance provides protection from both professional service errors and potential cyber incidents.

Typical Coverage Limits for Errors and Omissions Insurance

• Per Claim Limit: Typically ranges from $250,000 to $5,000,000, depending on the nature and size of your business.
• Annual Aggregate Limit: This is the total amount the insurer will pay during a policy year, often ranging from $500,000 to $10,000,000, depending on your risk exposure.
• Defense Costs: Many policies provide defense costs outside of the coverage limit, meaning that legal defense expenses do not reduce the total amount available for settlements or judgments.

Examples of Errors and Omissions Claims

Errors and Omissions Insurance can cover a wide range of professional liability claims, including:

• Consulting Errors: A consultant provides incorrect advice that leads to financial losses for a client. E&O Insurance helps cover the legal defense costs and any settlements.
• Missed Deadlines: A graphic designer misses an important project deadline, resulting in financial losses for their client. The client files a claim, and E&O Insurance helps cover the damages.
• Contract Disputes: A real estate agent is accused of failing to disclose critical property information, leading to unexpected expenses for the buyer. E&O Insurance helps pay for the legal defense and any settlements.

To further enhance your coverage, consider adding a Commercial Umbrella Policy, which extends the limits of your existing liability policies, including Errors and Omissions Insurance, to ensure complete protection for your business.

Getting a Quote for Errors and Omissions Insurance

Frequently Asked Questions

• Who needs Errors and Omissions Insurance? E&O Insurance is essential for any professional providing specialized services or advice, including consultants, financial advisors, real estate agents, and IT professionals.
• How much Errors and Omissions coverage do I need? The amount of coverage depends on the type of services you offer, the size of your business, and your risk exposure. Our agents can help you determine the appropriate coverage limits.
• Is Errors and Omissions Insurance the same as Professional Liability Insurance? Yes, in many industries, the terms Errors and Omissions Insurance and Professional Liability Insurance are used interchangeably. Both provide similar coverage, but E&O is typically more specific to industries like consulting, IT, and real estate.
• What is not covered by Errors and Omissions Insurance? E&O Insurance does not cover intentional wrongdoing, bodily injury, property damage, or cyber risks. For additional protection, consider pairing it with General Liability Insurance and Cyber Liability Insurance.