Errors and Omissions Insurance

Errors and Omissions is a type of professional liability insurance that offers protection to companies and employees from claims of inadequate work and negligent actions from clients. It is made for people who offer various professional services to their clients. Also known as E&O, this professional liability insurance provides coverage for related financial losses. In case you are sued for harming another person or business through inaccurate advice, alleged negligence, or misrepresentation, For instance, insurance for errors and omissions may cover the cost of judgments, legal defenses, or settlements.

Errors and Omissions Insurance

Some of the businesses and professionals that may benefit from errors and omissions insurance include accounts, investments, consultants, engineers, doctors, lawyers, wedding planners, financial services, contractors, and real estate agents. E&O also covers mistakes, oversights, missed deadlines, and undelivered services. Knowing what this insurance covers can help you see why it’s important to include it in your risk management strategy.

Understanding E&O insurance

It’s common for professionals who offer services to face claims from their clients, so they get professional liability insurance (PLI) to protect themselves. PLI covers things like misrepresentation, malpractice, or negligence. One type of PLI is Errors and Omissions (E&O) insurance, which shields against claims of shoddy or inadequate work.

Any business or person providing professional services or advice needs E&O insurance. Examples include doctors, lawyers, financial advisors, and engineering firms. E&O insurance covers settlements up to a predetermined amount and often includes court costs, which can be high.

For instance, if an investment firm messes up a calculation leading to a wrong investment decision and loss for clients, they might face claims for damages. A good E&O insurance policy would cover legal expenses and settlements.

What does Errors and Omissions Insurance cover?

Just like I have mentioned above, errors and omissions insurance covers mistakes and oversights made in professional work. This includes things like giving inaccurate advice, making misleading statements, missing fixed deadlines, being undelivered, or failing to use reasonable care. If your business is sued for these errors, the insurance helps cover legal fees, settlements, and other related costs. It’s like a safety net for protecting your business from financial harm caused by mistakes or negligence in your work.

What does it not Cover?

Meanwhile, some of the issues not covered by the E&O insurance may include the below. Check them out.

  • Employment practices such as harassment and wrongful termination are not covered under the E&O. You will need to purchase employment practices liability insurance to help you with this.
  • Property damage or bodily injury caused by your business would not be covered by the policy. You would need a business liability insurance policy for these claims.
  • A trade secret that you have taken without the owner’s permission will not be covered by the E&O policy if you get sued. A general liability insurance policy may cover you if you steal intellectual property.
  • Work-related injuries and illnesses fall under the worker’s compensation insurance policy.
  • Personally identifiable information that gets stolen or lost by your company won’t be covered by errors and omissions coverage. You can cover these costs with a data breach insurance policy.

Is Errors and Omissions Insurance coverage required?

This insurance coverage may be required for certain professions, such as real estate agents, attorneys, contractors, and medical professionals. These requirements may vary by profession and cost. You should consider E&O insurance, even if it is not required in your state. With this coverage, you will be able to escape huge out-of-pocket expenses if you get sued for a mistake.

How much does Error and Omission Insurance Cost? 

Several factors affect E&O insurance rates, like the industry, location, revenue, and policy limits. Industries like construction often have higher rates due to the potential for significant property damage. Larger businesses with more revenue might pay more because they face a higher risk of lawsuits. However, companies with strong training and a history of avoiding claims can often get lower rates. Nevertheless, the average cost of errors and omissions insurance is $61 per month, according to Insureon. That will be $735 per year.

Where can I get an Error and Omission Insurance Quote?

If you already have the business owner’s policy, you should add E&O to your BOP. It is usually cheaper this way than purchasing a standalone. You can also compare errors and omissions in insurance quotes among various companies. Below is a list of insurance providers that sell the policy.

  • Berkshire Hathaway
  • Chubb
  • Markel Insurance
  • Nationwide
  • Next Insurance
  • Progressive
  • State Farm
  • The Hanover
  • The Hartford
  • Tokio Marine
  • Travelers
  • Acuity
  • Allianz
  • Allstate
  • AmTrust Financial
  • Auto-Owners
  • Axis Insurance
  • Westfield Insurance
  • Cincinnati Insurance
  • Clear Blue Insurance Group
  • CNA
  • Frankenmuth Insurance
  • Geico
  • Hiscox
  • Liberty Mutual

Errors and Omissions (E&O) insurance acts like a safety net for professionals who provide services or advice. Whether you’re a doctor, lawyer, accountant, or any other type of service provider, having E&O insurance gives you peace of mind. Knowing that you’re protected if a client ever claims that you didn’t live up to their expectations. You can get quotes and purchase the coverage from any of the above-listed insurers.