What is errors and omissions insurance?
Errors and omissions insurance (E&O) is a type of professional liability insurance that protects a business from customer claims of negligence or inadequate work related to its professional advice and services.
An E&O policy can cover legal fees and settlement costs associated with these claims, even if a mistake wasn’t made. Real estate agents, home inspectors, consultants, and other professionals who sell a service might need this coverage.
How much does E&O insurance cost?
varies among businesses and depends on several factors. Your business class, coverage needs, number of clients, state, and more can affect your rate. Insurers will ask questions about these features when you get an errors and omissions insurance quote.
The following factors can help determine your E&O insurance premium:
- Profession: Each industry is exposed to different types of liabilities. High-risk professions can expect to pay more for an E&O policy than low-risk professions.
- Coverage limits: The amount of liability coverage you choose affects your E&O cost. A policy with a $2 million limit will likely cost more than a policy with a $1 million limit.
- Business size: Businesses with employees or several client accounts have an increased chance of making a mistake and can therefore expect to pay more for errors and omissions insurance.
- Claims history: Professionals with a history of lawsuits usually have a higher E&O insurance premium than businesses that don’t have claims.
- Location: Some states require businesses to carry a certain amount of errors and omissions coverage. Additionally, areas with higher-than-average claims might have increased rates.
The most accurate way to find out exactly how much you’ll pay for errors and omissions insurance is to get a quote. Simply start a quote online or call us to speak with a licensed agent who can help you customize an E&O policy to fit your needs and budget.
What does E&O insurance cover?
Errors and omissions insurance covers the legal fees and settlement costs that result from claims of negligence or substandard work against your business. It protects your business if a client feels your professional work didn’t meet their expectations or caused them financial harm, whether or not you made a mistake.
E&O insurance coverage can protect from a variety of situations, such as:
- Giving incorrect advice
- Failing to deliver a service
- Missed deadlines
For example, a consultant gives incorrect advice that causes a client to lose money. As a result, the customer decides to sue for damages. E&O insurance could cover the consultant’s mistake and associated legal fees.
E&O insurance can also offer coverage for claims from services provided in the past and work performed anywhere in the world.
What doesn’t E&O insurance cover?
There are several types of claims that aren’t covered by errors and omissions insurance, including:
- Customer injury and property damage: General liability insurance typically protects against non-employee injury and property damage related to your business operations.
- Incidents involving your business vehicles: Commercial auto insurance covers claims that involve your work vehicles.
- Damage to your business property: A business owners policy (BOP) protects against losses related to your commercial property and business assets.
- Employee injury or illness: Workers’ compensation insurance covers your employees if they become injured or ill while at work.
- Employment claims: Employment practices liability insurance (EPLI) covers the cost of defending your company against employee allegations, such as discrimination, harassment, and wrongful termination.
E&O insurance can protect against a variety of claims, but it doesn’t cover everything. Get a quote to learn which types of insurance are best for your business.
Who needs E&O insurance?
Any business that offers advice or provides a professional service should consider an errors and omissions policy. Occupations that require E&O insurance typically include:
- Consultants
- Real estate agents
- Insurance agents
- Technology firms
- Lawyers
- Accountants
- Engineers
- Architects
In addition, business partners and licensing boards may require errors and omissions insurance by contract.
Anyone can sue your business if they feel they have suffered a loss due to your services — actual or perceived. For example, a client could sue a real estate agent if they feel they lost a property acquisition because of the agent's mismanagement. E&O coverage could help pay for the realtor’s settlement costs.
Get an E&O insurance quote today
Protect your business against claims of professional negligence by getting an errors and omissions insurance quote. Our insurance experts can answer your questions and help you find coverage that meets your needs. Call us directly or start a quote online.
More information
- What is professional liability insurance?
- General liability vs. professional liability
- Professional liability insurance cost
- What is the difference between claims-made and occurrence policies?
