Errors and Omissions Insurance – Everything You Need to Know

As a business owner or professional providing services, it’s important to protect yourself against claims of negligence or errors that may arise from your work. One way to do this is by getting errors and omissions (E&O) insurance.

What is Errors and Omissions (E&O) Insurance?

E&O insurance, also known as professional liability insurance, is a type of insurance that provides coverage for claims made against a professional for negligent acts, errors, or omissions that occur while providing services to clients. This type of insurance is especially important for those in professional service industries such as lawyers, doctors, consultants, and accountants.

How does E&O Insurance work?

When a claim is made against a professional for errors or omissions, E&O insurance comes into play. The insurance company will assign a claims adjuster to investigate the claim and determine if it is covered under the policy. If the claim is approved, the insurance company will pay for the defense costs and any settlements or judgments that arise from the claim, up to the policy limit.

It is important to note that E&O insurance only covers claims made during the policy period. Claims arising from work performed before the policy period are not covered.

Why is E&O Insurance important?

Even the most skilled and experienced professionals can make mistakes. When these errors or omissions result in financial loss or harm to a client, the professional can be held liable for damages.

E&O insurance helps to protect professionals from the financial impact of claims against them. Without this insurance, professionals may be forced to pay for defense costs and damages out of their own pockets, which can be financially devastating.

Who needs E&O Insurance?

Any professional who provides services to clients can benefit from having E&O insurance. This includes but is not limited to:

Even if a professional is highly skilled and experienced, they can still face claims from clients who feel they have suffered financial harm as a result of the professional’s work.

What are some examples of claims covered by E&O Insurance?

E&O insurance covers claims arising from negligent acts, errors, or omissions that occur while providing services to clients. Some examples of claims that may be covered include:

• Failure to meet a contractual obligation
• Incorrect advice or recommendations
• Missed deadlines
• Defective work or products
• Failure to prevent cyber attacks

How do you get E&O Insurance?

Getting E&O insurance is a straightforward process. You can contact an insurance broker or agent who specializes in professional liability insurance to get a quote. They will ask about your profession, the services you provide, and your claims history to determine the appropriate coverage and premium.

What factors affect the cost of E&O Insurance?

The cost of E&O insurance varies depending on several factors, including:

• The level of risk associated with your profession and services
• Your claims history
• The size of your business
• The amount of coverage you need

Generally, the higher the risk associated with your profession and services, the higher the premium for E&O insurance.

How much coverage do you need?

The amount of coverage you need depends on the size and nature of your business. A small business with limited exposure may only need a few hundred thousand dollars in coverage, while a larger corporation with higher risks may need several million dollars in coverage.

Conclusion

E&O insurance is an important type of insurance that provides coverage for claims arising from errors or omissions in professional services. Any professional who provides services to clients can benefit from having this insurance to protect against potential liability and financial losses.

If you are a professional providing services, consider getting E&O insurance to protect yourself and your business against claims of negligence or errors that may arise.