Errors and Omissions Insurance
What is errors and omissions insurance?
Errors and omissions insurance (E&O) is a type of professional liability insurance that protects a business from customer claims of negligence or inadequate work related to the professional advice and services they provide.
An E&O policy can cover legal fees and settlement costs associated with these claims, even if a mistake wasn’t made. Real-estate agents, home inspectors, consultants and other professionals who sell a service might need this coverage.
How much does E&O insurance cost?
E&O insurance cost varies among businesses and depends on several factors including your:
- Profession – Each industry is exposed to different types of liabilities. High-risk professions can expect to pay more for an E&O policy than low-risk professions.
- Coverage limits – The amount of liability coverage you choose affects your E&O cost. A policy with a $2 million limit will likely cost more than a policy with a $1 million limit.
- Business size – Businesses with several client accounts or employees have an increased chance of making a mistake and can therefore expect to pay more for errors and omissions insurance.
- Claims history – Professionals with a history of lawsuits usually have a higher premium than businesses who are claim-free.
- Location – Some states require that a business carry a certain amount of errors and omissions coverage. Additionally, areas with higher-than-average claims might have increased rates.
The most accurate way to find out exactly how much you’ll pay for errors and omissions insurance is to get a quote. Simply start a quote online or call us to speak with a licensed agent who can help you customize an E&O policy that fits your needs and budget.
What does E&O insurance cover?
Errors and omissions insurance covers the legal fees and settlement costs that result from claims of negligence or substandard work against your business. It protects your business if a client feels your professional work didn’t meet their expectations or caused them financial harm, whether or not you made a mistake.
E&O coverage can protect from a variety of situations, including:
- Giving incorrect advice
- Failing to deliver a service
- Missed deadlines
E&O insurance can also offer coverage for claims from services provided in the past and work performed anywhere in the world.
What E&O insurance doesn’t cover
There are several types of claims that aren’t covered by errors and omissions insurance, including:
Customer injury and property damage
General liability insurance typically applies if a customer becomes injured or you damage their property in the course of your work.
Incidents involving your business vehicles
Commercial auto insurance covers liability claims that involve your work vehicles.
Damage to your business property
A business owners policy (BOP) protects against losses related to your commercial property and business assets.
Employee injury or illness
Workers’ compensation insurance covers your employees if they become injured or ill while at work.
Who needs E&O insurance?
Any business that offers advice or provides a professional service needs an errors and omissions policy. Occupations that require E&O insurance typically include:
In addition, business partners and licensing boards may require errors and omissions insurance by contract.
Ultimately, anyone can sue your business if they feel they have suffered a loss due to your services—actual or perceived. For example, a real estate agent could get sued by a client who feels the loss of a property acquisition was a direct result of the agent's mismanagement.