Frequently asked questions about errors and omissions insurance

Businesses that offer a professional service or give advice to clients often need errors and omissions insurance (also known as professional liability insurance). It’s the only business insurance that protects against dissatisfied clients who file a lawsuit over a mistake, missed deadline, or another complaint related to the quality of your work.

The circumstances that lead to potential professional liability claims are extremely common in some industries:

• If a client has unmet expectations based on a miscommunication or an error in a contract, email, or order form, they may sue.
• If you give erroneous instructions or advice, a client may blame you and sue for damages.
• If your work is late, incomplete, or fails to meet industry standards, your business could face a lawsuit.

Certain professionals, such as real estate agents, doctors, and lawyers, are required to carry E&O insurance. Your clients might also ask you to carry this coverage.

For more detailed explanations of E&O lawsuits your business could face, see these examples of errors and omissions claims.

Errors and omissions insurance covers legal expenses if you're sued over the quality of your work. Lawsuits – even simple or unfounded ones – can easily cost between $10,000 and $100,000, depending on the complexity of the dispute and your client’s willingness to settle. Professional liability lawsuits are particularly expensive because they involve more than just one type of cost. For instance:

• You'll have to pay a lawyer $150 to $400 per hour for the time they spend on your case.
• You’ll have to pay administrative costs for copies, data processing, and document review software, as well as shipping and travel expenses.
• For certain filings and hearings, you'll have to cover court costs.
• You might have to pay expert witnesses thousands of dollars to explain the technical aspects of your argument.
• You might have to pay a settlement to avoid a trial or a court-ordered judgment if you lose the trial.

As with small businesses, independent contractors can be held liable for mistakes and oversights that cost their clients money. They might need this policy to:

• Protect against legal costs of a lawsuit
• Comply with state laws
• Meet the terms of a client contract

Read more about errors and omissions insurance for independent contractors.

Yes. Even if your business wasn't at fault, you may be sued by a client who believes you caused their financial loss. Errors and omissions insurance covers your legal expenses even if the lawsuit never makes it to court.

It takes just a few minutes to complete Insureon’s online errors and omissions insurance application. In most cases, we’ll show you quotes as soon as you finish the application.

When you purchase a policy, we’ll email you a certificate of insurance right away. The certificate of insurance is the formal proof of insurance that you need to show when you apply for professional licenses or sign certain contracts.

Insureon’s errors and omissions insurance application requires basic information about your business, including its location, number of employees, and estimated revenue.

When you finish the application, you'll receive quotes from top-rated insurers. Look them over and pick the one that works best for you. If you need help, a licensed Insureon agent is available to assist you throughout the process.

It depends, since your errors and omissions policy will cover liabilities specific to your business. To determine an insurance premium, your insurance provider will consider your industry, your claims history, and your services.

The options you choose – such as deductible, policy limit, and type of coverage – will also affect your rate.

Learn more about errors and omissions insurance costs and how to find cheap E&O policies.

You should purchase coverage as soon as possible. As a "claims-made" policy, errors and omissions insurance only covers a claim if the incident and resulting lawsuit happen while the same policy is active. It’s important to maintain uninterrupted coverage as years may pass between an incident and the lawsuit in states that have lenient statutes of limitations.

Most small business owners purchase an errors and omissions policy early and maintain the same policy for the life of their business so there are no gaps in coverage. If you think your business might be exposed to risk, or have let a prior policy lapse, bring it up with your insurance agent – there may be ways to extend your protection.

You can access your certificate of liability insurance online. We email you one when your policy is activated or you can access your certificate online by logging into your Insureon account.

You can always add more insurance to your policy at a later date. Your insurance agent can adjust the coverage amount on an existing policy or provide assistance if you need to purchase other policies.

If you cancel your policy, you run the risk of paying more for coverage later on. Providers usually charge businesses that start and stop coverage higher rates.

Also, canceling an E&O policy leaves your business exposed to risk. Because errors and omissions is a "claims-made" policy, it only provides coverage if the incident and the lawsuit happen while the policy is active. In some cases, years can pass before a client decides to sue over an incident. It’s important to keep your policy active to ensure you’re protected against clients who sue at a later date. Most small business owners keep an E&O policy in place for the life of their business to prevent gaps in coverage.

To make an errors and omissions claim, contact your insurance provider. An insurance agent will ask you for a description of the incident and basic information such as your name, business name, and policy number. The agent will guide you through the process and provide answers to any additional questions.

Errors and omissions insurance and professional liability insurance are two names for the same policy. Different industries tend to use different terms for this policy. It’s also called malpractice insurance in the medical business. Read more about professional liability insurance vs. errors and omissions insurance.

General liability insurance offers protection if a client or other non-employee sues your business over a physical injury, property damage, or an advertising injury (libel or slander). Errors and omissions insurance offers protection if a client sues over a professional mistake or oversight that resulted in financial loss.

Almost every business owner could benefit from general liability insurance, but only certain professionals need an errors and omissions policy. Read more about general liability vs. errors and omissions insurance.