What is errors and omissions insurance?
- Errors and omissions insurance
E&O insurance, also known as professional liability insurance, protects small businesses against lawsuits brought by clients claiming that work was inaccurate, late, or never delivered.
When do small businesses need errors and omissions (E&O) insurance?
Errors and omissions (E&O) insurance is liability coverage for professionals who make a living off their expertise. It covers the cost of lawsuits over professional work mistakes, such as an insurance agent failing to provide adequate coverage or a tax preparer making a costly accounting error. Your clients may request a certificate of insurance that shows you have this coverage before they do any work with you.
Errors and omissions policies typically cover:
- Work mistakes and oversights
- Undelivered services
- Accusations of negligence
- Missed deadlines
Read more about errors and omissions insurance coverage.
What’s the difference between errors and omissions and professional liability insurance?
Errors and omissions insurance is also called professional liability insurance. Different industries and professions use different names for the two policies, even though they offer identical coverage.
Professionals who use the term E&O include:
Professionals who use the term professional liability include:
Doctors, lawyers, and other professionals in the medical and legal fields refer to this policy as malpractice insurance. (Insureon does not offer quotes for malpractice insurance.)
How errors and omissions insurance protects different professions
Insurance agents
Errors and omissions insurance for insurance agents covers the costs of lawsuits over a professional mistake, such as bad advice that led to insufficient coverage or an oversight that left a client vulnerable to liabilities. Some clients may require proof of E&O insurance before they agree to work with you.
Real estate agents
Errors and omissions insurance helps real estate agents and brokers cover the legal expenses of lawsuits based on issues like disclosure errors, failure to close, and mismanagement. Unless you can provide proof of errors and omissions insurance, some clients, buyers, or sellers may refuse to work with you.
Tax preparers
Errors and omissions insurance for tax preparers covers the costs of lawsuits based on missed deadlines, accounting errors, miscalculations, or lost documentation. Because the policy offers indirect protection for the client, some clients will require proof of insurance before they’ll work with your business.
IT professionals
Errors and omissions insurance for IT professionals provides financial protection from lawsuits based on software liability, data breaches, and technology errors. Some potential clients will only work with contractors who can provide proof of errors and omissions insurance.
Errors and omissions insurance costs
Several factors affect errors and omissions insurance costs, including:
- Industry and risk factors
- Coverage limits
- Business size
- Day-to-day operations
Learn more about errors and omissions insurance
- What’s the difference between professional liability and errors and omissions insurance?
- How do standards of care affect professional liability exposure?
- Common questions about errors and omissions insurance certificates
- How does general liability insurance differ from errors and omissions insurance?
Find more answers to frequently asked questions about errors and omissions insurance.