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:
- 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.
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.
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 are excellent candidates for this form of small business protection:
How do I 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 an application today to protect your business against claims of professional negligence.