Errors and Omissions Insurance
Quick answer: Errors and omissions (E&O) insurance, also called professional liability insurance, helps protect your business when a client claims a mistake, negligence or failure to deliver professional services caused them a financial loss. It can pay defense costs and covered settlements. Consultants, contractors who offer design or advice, agencies, and tech and service firms commonly carry it.
Overlooking something small might lead to something big. Errors and omissions insurance offers you protection if mistakes, negligence, or discrepancy can be interpreted as fraud and lead to legal action. Business owners and executives have several legal and financial responsibilities that accompany their roles, and if they fail to fulfill these responsibilities by inaccurately reporting income, errors and omissions insurance will reimburse a business for problems arising from these oversights.
As a business owner, you know how important it is to live up to your promises. Consumer trust is a key part of earning repeat business, which in turn helps to create a stronger, healthier, and more profitable company. Even a claim without merit can be costly to defend. That is why it is important to choose coverage limits that fit the size of your contracts and the professional services you provide.
What does E&O cover?
Policies can vary, but most forms of errors and omissions insurance cover the following. Note that some industries don’t need all of the coverage mentioned below, while others may need additional coverage because of the nature of their operations. Lions & Coventry Insurance Services agents will help you determine which coverages are best for you.
Claims and Damages: These are one of the major sources of potential loss that your company faces. E&O protection on claims can reimburse you for any payouts you may have to make as a result of such claims being filed.
- Defense Costs: Whether or not you win a case, your attorney is going to expect payment. E&O insurance can reimburse you for their fees, allowing you to hire professional support without worrying that it will be too expensive for you to afford.
- Employees, Temporary Staff, and Independent Contractors: You may be liable for the actions that anyone associated with your business takes—whether or not they’re an employee. This part of the policy protects you if they make a mistake.
- Negligence: Often considered one of the most important parts of E&O coverage, negligence coverage can reimburse you for problems like making a mistake while giving advice or failing to complete a job. Whatever the cause of the problem, ensuring you’re covered will help protect your business if something goes wrong.
Errors and omissions policies payouts vary among companies depending on the possible severity of financial mishaps. If you’re not sure how much of a cap your business should have in each category, call one of Lions & Coventry Insurance Services agents today and ask them for more information. You may need to increase your policy cap as your business grows, and we can help you decide when it’s time to raise the limit.
Errors and omissions insurance FAQ
What is the difference between E&O and general liability insurance?
General liability covers third-party bodily injury and property damage, such as a visitor slipping at your office. E&O covers financial loss a client says was caused by your professional mistakes, negligence or advice, which general liability typically excludes. Many service businesses carry both.
Is errors and omissions insurance the same as professional liability insurance?
Generally, yes. Errors and omissions and professional liability are two names for the same type of coverage, and the term used often depends on the industry. Policy wording varies, so review what each policy covers and excludes.
Can Lions & Coventry place E&O insurance nationwide?
Yes. Lions & Coventry Insurance Services, established in 2009, is licensed in all 50 states (CA Lic. #0G22084) and can help place errors and omissions coverage for businesses across the country. Call (916) 967-7715 to start a quote.