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Errors and omissions insurance

Errors and omissions (E&O) insurance is a form of insurance that covers business mistakes or undelivered services that caused financial harm to a customer.

How errors and omissions insurance protects your business

Errors and omissions insurance, also called professional liability insurance, protects your business by covering two major risks:

  • Damages you cause to a customer due to negligence or forgetfulness
  • The costs of defending frivolous lawsuits

Specifically, errors and omissions insurance covers a variety of legal claims against you, including:

  • Negligence
  • Misrepresentation
  • Violation of good faith and fair dealing
  • Inaccurate advice 

If a customer sues you on these grounds, your errors and omissions policy will pay for:

  • Your lawyer’s hourly fees
  • Costs for hiring expert witnesses
  • Administrative costs for handling case files
  • Court expenses 
  • Costs incurred when you agree to settle a lawsuit
  • Costs of paying for a legal judgment rendered by a judge or jury (penalties and fines)

Errors and omissions insurance does not cover deliberately misleading, wrongful, or illegal acts, mistakes you make in managing your business, or employment-related disputes.

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Who needs errors and omissions insurance?

Any small business that provides advice or services for a fee should consider errors and omissions insurance. The need is more acute if the service you provide is highly technical or complex, or if a mistake on your part is likely to create financial damage for a client.

Businesses in the following industries need E&O insurance protection:

E&O insurance eligibility requirements

Errors and omissions insurance is widely available to small businesses that provide services for a fee to their customers. 

To be eligible, you must fulfill your insurer’s underwriting criteria. This means your firm must not be in a prohibited (high-risk) industry or have filed numerous claims on your prior errors and omissions policies.

Find free quotes for errors and omissions insurance

Insureon helps small business owners compare commercial insurance quotes from A-rated U.S. carriers with one easy online application. Start a quote today to protect your business against claims of professional negligence.

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Updated: January 22, 2024
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