Errors and Omissions Insurance

Errors and Omissions Insurance coverage, also called E&O Insurance, is a specific type of business liability insurance that is purchased by business owners and professionals – such as insurance agents, real estate agents, architects, engineers and lawyers, as well as event planners and Web designers – to protect against lawsuits resulting from an error or omission committed by the insured party during work that is performed for a client. For doctors and dentists this coverage is usually called Medical Malpractice Liability Insurance. For some professions, such as architects, accountants, and lawyers, this type of insurance is known Professional Liability Insurance. The types of errors covered by these policies include actual mistakes made by professionals, losses due to work that was not completed in a timely manner, or the failure of work done by the insured to perform as promised. Any professional who performs work for a fee can have an Errors and Omissions exposure if there is the potential for a client to sue because of mistakes or mishandled work.

An E&O policy is usually purchased in addition to General Liability Insurance, a policy that protects businesses against most kinds of liabilities or lawsuits. When a business or professional is sued there can be extensive costs, even if the lawsuit is dismissed or the insured is found not liable. Just the cost of mounting a defense and paying lawyers can be enough to bankrupt a small business. General Liability Insurance provides coverage for any bodily damage and property damage liabilities facing business owners – for example, a slip and fall accident involving a customer or damage to a third-party's property by a business's employee.

General Liability Insurance, however, usually does not provide coverage for errors and professional performance disputes. Professionals with those liability exposures may need to purchase additional coverage. These products provide additional coverage for professionals in fields where certain kinds of lawsuits are common. E&O Insurance can also provide coverage for errors by subcontractors and employees.

Errors and Omissions insurance is a 'claims-made' insurance product. This means that coverage is triggered when a claim is presented to the insurance company during the policy period, even if the actual work under dispute occurred before the policy period.