What is Errors & Ommissions (E&O) insurance?
E&O insurance is a kind of specialized liability protection against losses not covered by traditional liability insurance. It protects you and your business from claims if a client sues for negligent acts, errors or omissions committed during business activities that result in a financial loss. It protects companies and professionals against claims of inadequate work or negligent actions made by clients.
What type of E&O insurance should I buy?
Errors and omissions insurance policies vary from company to company, and are written to reflect inherent risks and common exposures particular to different types of businesses.
Even if claims are found to be unwarranted, legal fees and other related expenses can quickly eat up a company’s cash reserves in no time, causing a financial hardship. Most errors and omissions insurance policies cover judgments, attorney fees, court costs and settlements up to the limits of the policy.
Some events resulting in a loss for a client may have occurred several years in the past, and the first time the mistake is apparent is when a court summons arrives in the mail. That’s when the retroactive date on the policy is very important. The farther back the retroactive date of the policy, the more coverage and protection it offers.
Who needs E&O insurance?
You need errors and omissions insurance if you’re in the business of providing a service to clients for a fee. Anyone who provides a service requires E&O insurance including financial services, insurance agents, doctors, lawyers, and wedding planners. Additionally, we provide E&O coverage to companies such as, printers, electricians, plumbers, HVAC installers and more.
E&O insurance is typically customized to meet specific needs of a business or industry. For example, a printer has different risks than an electrician and both have different risks than financial services. All have the need for liability insurance, yet each needs a specific type of coverage for their risks.
E&O insurance policies usually cover:
• You, the business owner
• Your salaried and hourly employees
• Any subcontractors working on behalf of your business
• What does E&O insurance cover?
Most errors and omissions insurance policies cover the following, up to the limits of the policy:
Judgments – Covers the decision of a court or judge, up to your policy limits
Attorney fees – Covers your attorney fees for defending your business in court, up to your policy limits
Court costs – Covers your business defense case court costs, up to your policy limits
Settlements – Covers the cost of settling a plaintiff’s claims out of court, up to your policy limits