Errors and Omissions Insurance

Liability coverage for businesses that provide services and advice

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What is errors and omissions insurance?

Errors and omissions insurance (E&O) is a type of  professional liability insurance that protects a business from customer claims of negligence or inadequate work related to its professional advice and services.

An E&O insurance policy can cover legal fees and settlement costs associated with these claims, even if you didn't make a mistake. Real estate agents, home inspectors, consultants, and other professionals who sell a service might need this coverage.

What does errors and omissions insurance cover?

E&O insurance helps cover legal fees and settlement costs if a client claims your business was negligent or delivered substandard work. More specifically, it protects you if a client feels you didn't meet their expectations or caused them financial harm.

E&O insurance coverage can support your company if you:

Give incorrect advice
Fail to deliver a service
Miss deadlines

For example, say a consultant made a budgeting error that caused a client to overspend. As a result, the customer sues for the money they lost. E&O insurance can help cover the consultant's mistake and legal fees.

E&O insurance can also protect against vicarious liability claims linked to work completed by your employees or contractors. It also applies to services you provided in the past and work completed worldwide.

How is E&O insurance different from professional liability?

Professional liability and errors and omissions insurance are two names for the same type of protection. Different industries use different terms. If you work in real estate, consulting, technology, accounting, or financial services, you probably know it as E&O. Either way, it helps with claims of negligence and substandard work.

What does errors and omissions insurance not cover?

There are several types of claims that aren't covered by errors and omissions insurance, including:

Customer injury and property damage: General liability insurance covers non-employee injury and property damage related to your business operations.
Business vehicles:  Commercial auto insurance covers claims that involve your work vehicles.
Business property damage: A  business owners policy (BOP) protects against losses to your commercial property and business assets.
Employee injury or illness:  Workers' compensation insurance covers employees who are injured or become ill while working.
Employment claims:  Employment practices liability insurance (EPLI) covers defense costs for employee claims of discrimination, harassment, or wrongful termination.

E&O insurance is only one piece of a complete risk strategy. Explore other types of business insurance to learn which kinds are right for you.

Is errors and omissions insurance legally required?

Sometimes. Certain states require licensed professionals to carry E&O coverage because of the type of service or advice they provide. Common examples include real estate agents, insurance agents, lawyers, and medical professionals. Rules vary by state, so check with your licensing board to see what you need.

Beyond state laws, E&O insurance is sometimes included in contracts. Government agencies and corporate clients may expect vendors to carry this coverage. And even if it's not part of a contract, E&O helps safeguard your business.

Why small businesses need E&O insurance

Small businesses should consider E&O insurance because even simple mistakes can lead to big problems. Without errors and omissions coverage, service-based companies and professional advisors risk lawsuits and financial losses that can slow down their work. E&O coverage offers small business liability protection that supports your reputation and bottom line.

Who needs errors and omissions insurance?

Any business that offers advice or provides a professional service might need errors and omissions insurance. This type of coverage is especially important because clients can sue if they believe your work caused financial harm. For example, a real estate agent might face a lawsuit over a failed deal, or a consultant could be blamed for costly advice.

Common occupations that carry this coverage include:

Keep in mind, specific business partners and licensing boards may require errors and omissions insurance. Check your contracts and professional organizations to see if it's the right fit. If you need protection, start a quote today.

How much does errors and omissions insurance cost?

E&O insurance costs vary by business and depend on details like your:

Profession: Your industry influences how much you'll pay for E&O. High-risk professions can expect to pay more for a policy than low-risk ones.
Coverage limits: Higher liability limits mean higher premiums. For example, a $2 million policy will likely cost more than a $1 million policy.
Business size: Businesses with employees or multiple client accounts often pay more because they have a higher chance of making a mistake.
Claims history: A history of lawsuits usually leads to higher E&O insurance premiums compared to businesses with no claims.
Location: Some states require businesses to carry a certain amount of errors and omissions coverage. Additionally, areas with higher claims rates can influence how much you'll pay.

Get a quote to find out exactly what you'll pay for errors and omissions insurance. Simply  start online or  call us to speak with a licensed agent who can help you customize an E&O policy for your needs and budget.

Why choose Progressive Commercial for E&O insurance

Protect your business against claims of professional negligence by getting errors and omissions insurance with Progressive Commercial. We've been working with small businesses like yours for over 50 years. Our experts can answer your questions and help you find coverage that meets your needs.  Call us or  start a quote online.