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.
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 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:
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.
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.
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.
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.
Find more answers to frequently asked questions about errors and omissions insurance.