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What is Errors & Omissions Insurance?

Errors and omissions (E&O) insurance is a type of professional liability insurance. It helps protect your company from client claims that you made mistakes or errors while providing services or advice. This is a standard form of business insurance that also helps cover court or attorney costs. It can be purchased from major insurance providers, but it is advised to get it through independent insurance agents, as they can shop around to find the best coverage and the best price for your needs.

Note that home-based offices cannot get professional liability insurance coverage through homeowner’s policy. They have to obtain a separate E&O coverage.

What Does E&O Insurance for Small Businesses Cover?

The exact benefits of errors and omissions policy depend on the insurance company and the policy itself. Generally speaking, E&O policy protects small business owners against claims of:

In order to take full advantage of this type of insurance and cover the claims with this policy, you have to take into consideration the policy period (including the extended reporting period) as well as the retroactive date.

Who Needs E&O Insurance?

If you own a business that provides services or offers consulting and advice, you should purchase E&O (professional liability) insurance. Some of the industries and occupations needing E&O policy coverage include real estate agents, lawyers, architects, plumbers, electricians, accountants, consultants, tech firms and engineers.

Generally, anyone can get sued by clients who feel they suffered a loss by rendering your services. Luckily, you can protect yourself and your business by getting E&O insurance coverage. Even if you have a Business Owners Policy (BOP) coverage, you should still purchase error & omissions insurance, as BOP does not cover your business against professional liability claims.

Is errors & omissions insurance the same as liability insurance?

E&O policy is the same as professional liability insurance, but different from general liability insurance. Errors & omission policy covers mostly negligence or mistakes while performing services, while general liability insurance policy covers claims from bodily injuries or damage caused by company’s products.

What is not covered by E&O insurance?

For a complete list of what your E&O insurance does not cover, read the policy in detail. Typically, major exclusions of your professional liability insurance policy include:

• Employment Issues, such as improper employment, employer’s liability claims, or worker’s compensation claims.
• Bodily Injury or Property Damage are not covered by E&O policy. If you want to protect your business against third-party injuries and damage claims you should purchase a General liability policy.
• Company vehicle incidents are not covered either. To insure your business fleet, you should buy Commercial auto insurance.
• Illegal and criminal acts, including dishonesty, fraudulent and intentional deeds of wrongdoings and certain liabilities, are not covered.
• Personally Identifiable Information (PII) or Personal Data – Errors & omissions policy does not cover your company’s failure to protect personal data under your control.
• Patents and Trade Secrets, such as claims alleging infringement or patent thefts

How much does E&O insurance premium cost?

The price of errors & omissions insurance depends on various factors. Some factors determining the price include type of industry, number of employees, exact location, claims history, and coverage limits. In general, high-risk professions pay higher policies. Likewise, larger companies can expect to pay more, as they have bigger chances of making a mistake, due to the number of employees.