Errors and Omissions Insurance: What It Is and Who Needs It
What Is Errors and Omissions Insurance?
Errors and Omissions (E&O) insurance goes by many names depending on the profession. For some healthcare professionals, it’s called malpractice insurance. For lawyers, it’s often referred to as professional liability insurance.
Whatever name it goes by, E&O insurance coverage is designed to protect you or your company from financial damages that may arise if a client holds you responsible for a service that didn’t meet an expected or promised outcome.
What Does E&O Insurance Cover?
Some errors and omissions insurance policies are also designed to protect you from claims involving a failure to provide a service altogether. E&O insurance generally covers risks that a general liability insurance policy likely does not.
Most E&O policies cover:
- Judgments
- Settlements
- Defense costs associated with civil suits initiated by a dissatisfied client
This material is not intended as legal advice. Please consult a legal professional for specific information regarding your individual situation.
Who Should Consider Errors and Omissions Insurance?
E&O insurance is commonly associated with professionals such as doctors, lawyers, and financial advisors. However, anyone in the business of providing a service for a fee should consider this type of professional liability insurance.
Whatever your profession, it’s worth imagining your potential liability if work performed by you or your employees wasn’t completed properly, was delayed, or fell short of what a client expected.
Customizing Your E&O Coverage
Most errors and omissions insurance policies can be structured to fit the specific needs of your business. Risk exposure varies significantly by profession — for example, a wedding planner faces different risks than an accountant, which means each may need a different form of E&O coverage.
If you run a service-based business in Fort Myers or elsewhere in Southwest Florida, working with an insurance professional can help you determine the right level and type of errors and omissions coverage for your specific line of work.
Frequently Asked Questions
What is errors and omissions insurance?
Errors and omissions (E&O) insurance is a type of professional liability insurance that protects individuals or businesses from financial damages if a client claims a service didn’t meet an expected or promised outcome, or wasn’t provided at all.
What does E&O insurance cover?
E&O insurance typically covers judgments, settlements, and defense costs associated with civil suits brought by dissatisfied clients. Coverage generally applies to risks that a general liability policy doesn’t address.
Is errors and omissions insurance the same as professional liability insurance?
Yes, in many cases. E&O insurance is often called professional liability insurance, and in some fields — such as healthcare — it may be referred to as malpractice insurance. The core purpose is the same across these names: protecting professionals from claims related to their services.
Who needs errors and omissions insurance?
While E&O insurance is commonly associated with doctors, lawyers, and financial advisors, anyone who provides a service for a fee should consider this coverage, since any service-based business carries some risk of a client claiming the work fell short of expectations.
Can errors and omissions insurance be customized?
Yes. E&O insurance policies can typically be tailored to the specific risks of a given profession or business. Since different professions face different types of liability, coverage should reflect the specific services being provided.
