Errors and omissions (E&O) insurance is a type of professional liability insurance that protects businesses against claims made by clients for inadequate work or negligent actions. Coverage is written on a claims-made basis, meaning that a claim or suit must be filed while the policy is in force.
Most error and omission policies are written on an occurrence basis, which means that the act triggering the claim must occur during the policy period, regardless of when the claim is made. Occurrence coverage generally costs more than claims-made coverage. E&O insurance does not cover intentional wrongdoings, contractual disputes, or fines and penalties levied by a regulatory body.
Who needs E&O Insurance?
Errors and omissions insurance is important for any business owner, regardless of profession. E&O coverage is typically sold to companies in professional services industries, such as architects and engineers, accountants, consultants, and lawyers. Errors and omissions policies typically cover lawsuits alleging that your services were negligent in some way — for example, that you failed to exercise due care or skill expected of professionals in your field; or if you offered inaccurate advice. The best E&O insurance policies cover legal defense costs as well as any settlements you may have to pay.
How much does E&O Insurance cost?
The exact price of a policy varies widely depending on the type of business you have and the type of work you do. Typically, your E&O insurance might range between $500-$1,000 annually for a policy.
Why do I need E&O Insurance for my business?
You’re an expert at what you do, but accidents happen. Something goes wrong, and before you know it, you’re getting sued by someone who hired you to do that very thing. What happens next? That’s where E&O insurance comes in.
Negligence is not always intentional. It could be as simple as an oversight that results in damage to your client or their property. For example, if you’re an accountant who forgot to file your client’s taxes on time and they incurred penalties because of it, they might choose to sue your firm for damages. Your E&O policy could help cover legal fees, court costs, and any settlements or awards you may have to pay.
Errors & Omissions (E&O) Insurance is a professional liability insurance policy that protects against claims made by a client for an error or omission in your work. E&O insurance covers the cost of lawyer fees and damages you may have to pay if you are sued by a client. If you operate any sort of business, no matter how big or small, it’s always a good idea to have Errors & Omissions Insurance. Ensuring that your business is protected with the right kind of insurance is key to its longevity and success.