What Is Errors and Omissions Insurance Coverage?
What is E&O insurance coverage? It’s a common question for this type of business insurance that we can help you understand better. Errors and omissions insurance
, also known as E&O insurance or professional liability insurance
, helps protect you and your company if someone claims you made a mistake in the professional services provided. This coverage can help pay the costs if a customer or client files a claim against your small business.
What Does Errors and Omissions Insurance Cover?
No matter how hard you try to avoid them, mistakes can happen. When they do, your customers can sue your business for:
- Violation of good faith and fair dealing
- Inaccurate advice
- Personal injury claims, like libel or slander
- Mistakes made by temporary staff and contractors
Una errors and omissions claims example
is an accountant giving a client bad advice which makes them suffer a large financial loss. As a result, the client sues the business owner of the accounting firm for negligence. Errors and omissions coverage can help pay for:
- Damages, including any judgments and settlements that result from the lawsuit.
- Court costs, which can include legal defense costs, attorney fees and other court-related expenses.
- Disciplinary proceedings called by a regulatory, licensing or other government agency.
- Loss of earnings due to the time you spend at depositions and trials.
- Subpoena assistance if you’re a witness in a lawsuit.
Another benefit of getting your E&O policy from us is that you’ll have coverage across the U.S. and Canada.
Who Needs Errors and Omissions Insurance Coverage?
Not sure who needs errors and omissions insurance
? Some states and licensing boards require certain businesses to have this coverage. Even if it’s not required, you should consider including E&O coverage in your risk management plan if you work with customers.
Some businesses that can benefit from this insurance include:
- Technology professionals, because tech failures can be devastating to your client’s finances. Software, hardware and electronic manufacturing businesses are at a high risk for errors or omissions lawsuits.
- Management and business consultants who provide advice can get sued by unsatisfied clients.
- Tax preparers, because mistakes or lapses in judgment can cost their clients money.
- Accountants, because they give a wide range of financial advice, so their mistakes can have big financial impacts.
- Advertising agencies, since they can get sued if an ad or campaign results in a financial loss for their client.
- Graphic designers who create ads, brochures, magazines, corporate reports and more for their clients with mistakes that can be expensive.
- Interior decorators, because clients who are unhappy with their advice and decorating services can file lawsuits.
- Real estate agents, since they can get sued if agents misrepresent a property.
- Travel agents, since a mistake can ruin a client’s vacation plans and lead to a lawsuit.
How Is E&O Insurance Different From General Business Insurance?
Every type of business insurance covers different kinds of claims. The same is true with E&O insurance and general liability insurance
. An E&O insurance policy helps cover claims that your business made a mistake in the professional services given. If someone claims your business hurt them or damaged their property, E&O coverage wouldn’t help you. Instead, you’d need general liability insurance.
General liability coverage helps cover claims that your business caused bodily injury or property damage to others. It’s an essential type of insurance that most small business owners need.
What Isn’t Included in E&O Insurance Coverage?
E&O insurance protects your business against a lot of risks and lawsuits, but it doesn’t cover everything. It won’t help if you get sued for:
- Employment practices, such as wrongful termination or harassment. You’ll need employment practices liability insurance to help cover these claims.
- Illegal acts or purposeful wrongdoing, including dishonest behavior or fraudulent actions.
- Patents and trade secrets taken without permission. Your general liability insurance policy may protect you if you’re sued for stealing intellectual property.
- Bodily injury or property damage caused by your business. If your customer falls and gets hurt in your office or your employee damages your client’s property, you’ll need general liability insurance.
- Work-related injuries or illnesses to your employees. Your workers' compensation insurance can help cover these.
- Lost or stolen personally identifiable information that your business collects. Data breach insurance can help cover your costs to notify impacted clients.
How Do I Get E&O Coverage?
If you’re wondering about errors and omissions insurance costs, there’s not an easy answer. Every small business is different and faces unique risks. Getting a quote is the best way to find out how much E&O coverage will cost you.
Last Updated: December 16, 2022
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