Errors and Omissions Insurance

Lawsuits are commonplace in settling disputes. The good news is you can protect yourself and your business and reputation, by investing in specialized liability coverage, also known as errors and omissions (E&O) insurance. 

Errors and Omissions insurance policies cover large legal defense costs sustained when trying to prove liability or innocence. They also eventually cover the final judgment, if the business owner does not win the lawsuit. 

E&O insurance is supplementary liability insurance that augments any business owner’s policy by safeguarding against catastrophic loss in the event of a lawsuit due to a negligent act, error or omission by the professional. In addition to claims of error, omission or negligence, it can also protect against slander, libel and breach of contract.   

Who Needs E&O Coverage? 

For anyone who gives advice, makes educated recommendations, designs solutions or represents the needs of others, this is important coverage to have. Service professionals such as accountants, computer consultants, software developers, planners, architects, real estate agents and contractors can also benefit from carrying E&O insurance. 

E&O Policy Overview 

E&O coverage begins when your commercial general liability policy does not provide coverage, such as for service errors, contract performance disputes or any other professional liability issues. These policies also include defense costs, which can be quite substantial, even if liability is not found. Policies typically do not provide coverage for non-financial losses or for intentional or dishonest acts.  

E&O policies generally have a claim limit and an annual limit, which are based on the insured’s exposure. The claim limit is the maximum amount paid for any single event, and the annual limit is the maximum paid in any one year. Typical limits range from $250,000/$500,000 to $2 million/$4 million and vary depending on the type of business. 

Count on the Experts 

When purchasing E&O coverage for your business, there are many factors to consider. This isn’t a standard or typical type of policy and an experienced agent who understands your needs is invaluable in ensuring you obtain the right coverage.