Term: Errors and omissions insurance

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.

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.

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.

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.