What Is Errors & Omissions Insurance?
Errors & Omissions Insurance protects businesses that provide professional services or advice if a client claims those services caused them financial harm.
Unlike Commercial General Liability Insurance, which primarily covers bodily injury and property damage, Professional Liability Insurance focuses on claims involving professional judgment, recommendations, consulting, or services.
Even if a claim is unfounded, defending yourself against allegations of professional negligence can be expensive. Errors & Omissions Insurance helps provide financial protection by covering eligible legal defense costs, settlements, and judgments, subject to the terms and conditions of the policy.
For many professional service businesses, E&O Insurance is one of the most important components of a comprehensive insurance program.
What Does Errors & Omissions Insurance Cover?
Coverage varies by carrier and policy, but Errors & Omissions Insurance may help protect your business from several common professional liability exposures.
Professional Mistakes
If a client alleges that an error in your professional services caused them financial harm, your policy may help cover legal defense costs and covered damages.
Negligence Claims
Coverage may apply if you’re accused of failing to meet the accepted professional standard of care while performing your services.
Missed Deadlines or Omissions
A missed filing deadline, overlooked detail, or failure to complete agreed-upon work can result in financial losses for a client. Depending on the circumstances and policy language, these claims may be covered.
Legal Defense Costs
Even when allegations are unfounded, defending a professional liability lawsuit can be costly. Errors & Omissions Insurance may help cover attorney fees, court costs, expert witnesses, and other covered legal expenses.
Settlements & Judgments
If your business is found legally responsible for a covered professional liability claim, your policy may help pay settlements or court-awarded damages up to your policy limits.
Who Should Consider Errors & Omissions Insurance?
Any business that provides professional advice, consulting, or specialized services should evaluate its Professional Liability exposure.
Businesses that commonly benefit include:
- Insurance Agencies
- Accountants & CPAs
- Architects
- Engineers
- IT Consultants
- Software Developers
- Marketing Agencies
- Business Consultants
- Financial Advisors
- Real Estate Professionals
- Graphic Designers
- Surveyors
If clients rely on your expertise or recommendations, Errors & Omissions Insurance should be an important part of your risk management strategy.
Common Errors & Omissions Claims
Missed Filing Deadline
An accounting firm misses a tax filing deadline, resulting in penalties and financial losses for its client.
Design Error
An architect’s design requires revisions after construction begins, delaying the project and increasing costs.
Technology Consulting Mistake
An IT consultant recommends a software solution that fails to meet the client’s operational needs, resulting in lost revenue and a professional liability claim.
Insurance Coverage Dispute
A client alleges they were not properly advised regarding insurance coverage and files a claim after discovering a coverage gap following a loss.
Did You Know?
You don’t have to make a mistake to be sued.
Many Professional Liability claims arise from misunderstandings, unmet expectations, or allegations that are ultimately found to be without merit. Even if you’re not liable, defending a lawsuit can be expensive.
Frequently Asked Questions
Is Errors & Omissions Insurance the same as General Liability Insurance?
No. Commercial General Liability Insurance protects against bodily injury, property damage, and certain advertising injuries. Errors & Omissions Insurance protects against claims involving professional services, advice, mistakes, or negligence.
Does Errors & Omissions Insurance cover legal defense?
Yes. Most policies provide legal defense coverage for covered claims, subject to the policy’s terms, conditions, and limits.
Is Professional Liability Insurance required?
Some professions are required by law, licensing boards, or client contracts to carry Professional Liability Insurance. Even when it’s not required, many businesses choose this coverage because of the financial risks associated with professional services.
Does Errors & Omissions Insurance cover intentional wrongdoing?
No. Intentional dishonest, fraudulent, or criminal acts are generally excluded from coverage.
How much Professional Liability Insurance do I need?
Coverage depends on several factors, including:
- Your profession
- Annual revenue
- Number of clients
- Contract requirements
- Potential financial impact of an error
- Industry standards
Our advisors can help evaluate your business and recommend appropriate coverage limits.
Related Commercial Insurance Coverages
Errors & Omissions Insurance is commonly paired with:
Together, these coverages help provide broader protection for professional service businesses.
Why Choose Generazio Associates?
Your expertise is what your clients rely on—but even experienced professionals can face unexpected claims.
At Generazio Associates, we work with professionals across many industries to understand their services, contractual obligations, and potential liability exposures. As an independent insurance agency, we compare options from multiple commercial insurance carriers to help you find protection tailored to your profession and your business.
When you work with our commercial insurance team, you’ll receive:
- Access to multiple professional liability insurance carriers
- Coverage recommendations tailored to your profession
- Guidance on contractual insurance requirements
- Responsive local service
- Experienced commercial insurance advisors
Request an Errors & Omissions Insurance Quote
Your reputation is one of your business’s most valuable assets. Protect it with Professional Liability Insurance designed for the services you provide.
Contact Generazio Associates, Inc. today for a complimentary Errors & Omissions Insurance review. We’ll evaluate your current coverage, identify potential gaps, and help you build an insurance program designed to protect your business from professional liability claims.
