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Errors and omissions insurance, also known as professional liability insurance or E&O insurance, can help protect your business from lawsuits claiming that you or your employees made a mistake in the professional services you provide. This coverage can help pay for your court costs or settlements that you’d otherwise have to pay for out of pocket if you don’t have this insurance. Below, you’ll find answers to frequently asked questions about errors and omissions insurance.
General E&O Insurance Questions
What Is Errors and Omissions Insurance?
Un common question we hear from customers is, “What is E&O insurance coverage?” It’s a common question we get and we’re here to help answer it. Errors and omissions (E&O) insurance helps protect your company if someone claims you made a mistake in the professional services you provided. Una errors and omissions claim example is an accountant giving a client bad advice, resulting in them losing a large amount of money.
What Types of Businesses Require Errors and Omissions Insurance?
Some states and licensing boards may require certain types of businesses to have E&O insurance. Some types of businesses that can also 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.
In What Ways Does Errors and Omissions Insurance Protect My Business?
Errors and omissions insurance helps cover your legal expenses and settlement costs if a client claims that you didn’t deliver on promised services. Even if you didn’t cause the client any financial loss, you can still be held liable if a customer believes you made a mistake. Errors and omissions insurance can help cover your court costs, like attorney fees and your loss of earnings if you must spend time away from your business to be at depositions or trials.
What Are the Reasons for Having Errors and Omissions Insurance?
There are many different reasons that a business owner may need errors and omissions insurance. E&O insurance can help pay for the following claim costs:
- 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.
Is Errors and Omissions Insurance a Legal Requirement?
While it’s not a requirement to have errors and omissions insurance, it can help you avoid having to pay out of pocket for expensive lawsuits that could come up when you least expect it. Although your state might not require you to have E&O insurance, there may be situations where you’ll need it. Certain industries may require your business to have some form of errors and omissions insurance. For example, your client could require you to have E&O coverage as a part of a contract before work starts. Your industry could also require this coverage due to federal regulations.
How Does Errors and Omissions Insurance Differ From General Liability Insurance?
The main difference between general liability and errors and omissions coverage is the types of risks they cover. General liability insurance covers physical risks, such as bodily injuries and property damage. While E&O insurance covers more abstract risks, such as mistakes in the services your business provides. To make sure your business is more fully protected, it’s a good idea to carry both types of insurance.
Coverage and Protection Questions
What Kinds of Losses Does Errors and Omissions Insurance Cover?
Errors and omissions insurance can help protect against claims of:
- Negligence: For example, your accounting firm makes a clerical error that costs your client thousands of dollars. E&O insurance can help pay for the legal fees, settlements and defense costs.
- Misrepresentation: E&O insurance can help if a client claims that false or misleading information convinced them into a contract agreement with you or your company, which caused damages to the client.
- Personal Injury: This can help if someone accuses you or your business of libel or slander, whether it’s true or not. For example, a competitor claims that your new advertisements are slandering their business and they sue you for damages.
- Inaccurate advice: If a customer claims that you provided advice that caused them damage, you’ll need E&O Insurance. For example, a client sues your florist shop for errors in the services you provided after you failed to deliver flowers on time for their wedding.
- Copyright Infringement: For example, a sound engineer sues your company for using one of their sounds without their permission in one of your new advertisements. E&O insurance can help protect your business from having to pay out of pocket for your legal costs.
- Defense Costs: If a client sues your business for mistakes in the professional services you provided, E&O insurance helps pay for defense costs, like attorney fees and other court-related expenses.
Can E&O Insurance Cover Contractual Disputes With Clients?
If you breach a contract intentionally, your insurance will not protect you. If a breach of contract lawsuit results from a mistake or oversight in the professional services you provided, your E&O insurance can help protect you. Some clients may ask you for proof of professional liability insurance, or errors and omissions insurance, before they agree to enter a contract with you.
Does Errors and Omissions Insurance Cover for Cyber Liability?
No, errors and omissions insurance doesn’t cover cyber liability lawsuits. You’ll need to have cyber liability insurance coverage to best protect your business from risks associated with cyberattacks and data breaches. Many small business owners start with a Business Owner’s Policy (BOP) and bundle it with errors and omissions insurance and cyber liability insurance.
Are There Specific Exclusions or Limitations in E&O Insurance Policies?
E&O insurance doesn’t cover intentional, fraudulent or criminal acts that caused your client harm. It also doesn’t cover all types of liability claims, like bodily injuries. For example, if someone sues your business after a slip and fall in your store, your E&O insurance won’t help. Instead, you’ll need general liability insurance coverage to help cover bodily injuries and property damage claims.
How Does Retroactive Date Work in E&O Insurance Policies?
Most insurance companies write an errors and omissions insurance policy on a claims-made basis with a retroactive date and extended reporting period. The retroactive date means that you’re covered for incidents that happen on or after a specified date in your policy. The extended reporting period helps cover claims filed within a certain time after your policy expires. This is generally a 30 to 60 day period, but you can extend this period to a year or more for an additional cost.
What Are Common E&O Claims?
Mistakes and accidents can happen when you least expect it. Some common E&O claim examples incluyen:
- Negligence
- Errors or omissions in your services provided
- Misrepresentation
- Violation of good faith and fair dealing
- Inaccurate advice
Does Errors and Omissions Insurance Offer Protection Against Frivolous Lawsuits?
Yes, errors and omissions insurance coverage can help protect your business even if the claim against your business is determined to be baseless. It can help provide coverage for claims of negligence in a lawsuit against your business, even if you didn’t do anything wrong.
How Long Does Errors and Omissions Insurance Coverage Typically Last?
It’s common for E&O policy periods to last one year, but the retroactive date will define your coverage of claims during the specified timeframe.
Can E&O Insurance Be Tailored to Specific Business Needs?
Your E&O insurance policy with The Hartford can be adjusted to meet your specific industry needs. You can work with our specialists to get the right amount of errors and omissions (E&O) insurance coverage for your business. We can also help you bundle your coverage with other types of insurance to make sure you’re more fully protected.
Costs and Premium Questions
How Much Does Errors and Omissions Insurance Cost?
Errors and omissions insurance costs will vary depending on factors like product type, limits chosen and risk class or hazard group of your industry. On average, our customers paid about $76 a month for standalone professional liability coverage.1 Keep in mind that different industries may see higher costs for insurance because of the risk class associated with the work you do. For example, healthcare professionals’ minimum average monthly premium was $132 for errors and omissions insurance.2
What Factors Influence the Premium Rates for Errors and Omissions Insurance?
Factors that can impact your errors and omissions insurance cost include:
- Policy details, like coverage limits
- Type of business
- Lugar
- Business size, number of employees and clients
- Years in business
- Claims history
How Can I Determine the Appropriate Coverage Limits for My E&O Insurance?
Determining your coverage limits for errors and omissions (E&O) insurance will depend on factors like the size of your business, industry and your exposure to risks. You may also want to consider what your business is able to afford out-of-pocket if you’re sued by a client. If you’re unsure about what your coverage limits should be, you can work with our specialists to find the right amount of coverage needed for your business.
Claims Process Questions
What Is the Claims Process for Errors and Omissions Insurance?
El documento errors and omissions claims process may seem complicated, but it doesn’t have to be if you follow the right steps:
- Submit the claim information to your insurance provider. Be sure to do this as soon as possible.
- Ask your insurance carrier to help you find a lawyer that specializes in E&O claims. This lawyer will review the claim and ask for a summary of information, including who was involved.
- Work with your lawyer and insurance company to agree on a settlement amount with your employee or customer that filed the claim. Your E&O policy can help pay for this settlement.
If you don’t reach a settlement outside of court, your claim will go to trial. Your E&O policy can still help pay for your legal defense costs. However, a jury will decide if the client that’s suing you will receive a settlement and for how much.
How Can I Reduce the Risk of Errors and Omissions in My Business?
Reducing your exposure to professional liability or errors and omissions risks may help prevent your business from being involved in costly lawsuits and claims. Here are six ways you can reduce the risk of errors and omissions exposures in your business:
- Identify risks facing your business and industry.
- Create review processes to help catch mistakes before they reach a client.
- Schedule ongoing staff training sessions.
- Provide regular, clear updates to clients about the work you’re doing for them.
- Have a response plan for worst-case scenario situations.
- Get errors and omissions insurance to help safeguard your business against unexpected lawsuits and claims.
Errors & Omissions Insurance Quotes
Somos una compañía de seguros con más de 200 años de experiencia. Whether you’re looking for errors and omissions insurance or other types of insurance, we’ve got your back. Our specialists are here to help you find the right amount of E&O insurance coverage to keep your business protected against the unexpected. Get a quote for errors and omissions insurance hoy mismo.
Última actualización: 2 de julio de 2024
1,2 Premium amounts presented are based on monthly premium paid by The Hartford's Small Business customers between 1/1/24 and 6/1/24 for 12-month policies. Premium is derived from a number of factors specific to your business and may vary.
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