Errors & Omissions Insurance
Errors and omissions (E&O) insurance helps cover legal costs if a client claims your work was incorrect, delayed, or not delivered. It’s also known as professional liability insurance.
Choose the right coverage from trusted insurance providers.
Why Is Errors & Omissions Insurance Important?
If you provide professional services or advice, this policy is essential.
Clients may require E&O insurance in contracts, and it’s highly recommended for professionals who rely on their expertise. Also known as professional liability or indemnity insurance, it protects your business from claims of mistakes, oversights, or negligence.
This policy covers legal defense costs, including court fees, settlements, and judgments. You’ll pay a deductible, and your insurer will cover expenses up to your policy limit.
Three key reasons small businesses need E&O insurance:
- Meets client contract requirements
- Required for certain professions in some states
- Covers legal defense costs within policy limits
Additional Coverages to Consider
Protect your business from unexpected risks with these essential coverages:
General Liability Insurance
fCovers customer injuries, property damage, and advertising claims. Helps with legal costs and is often required for leases and contracts.
Under this plan
Customer injuries
Business interruption incidents
Accidental damage to customer property
Workers’ compensation insurance
Covers medical expenses and lost wages for work-related injuries or illnesses. Required in most states for businesses with employees.
Under this plan
Employee medical expenses
Disability benefits
Workplace injury lawsuits
Commercial auto insurance
Protects business vehicles by covering accident-related legal costs, medical bills, and property damage.
Under this plan
Car accidents
Vandalism and theft
Weather damage
Cyber insurance
Covers expenses from cyberattacks, data breaches, and legal fees, ensuring your business stays secure online.
Under this plan
Data breach investigations
Customer notification expenses
Fraud monitoring services
How Much Does Errors & Omissions (E&O) Insurance Cost?
The cost of E&O insurance depends on several factors, including:
- Coverage Amount: Higher coverage limits increase the premium.
- Claims History: A history of past claims may raise costs.
- Industry Risk: Some professions carry higher liability risks.
- Number of Employees: More employees can mean higher premiums.
- Business Size: Larger businesses may need more coverage.
- Daily Operations: The nature of your work affects the risk level.
- Average Cost: E&O insurance typically costs $61 per month, with 32% of Eagle Nation small business customers paying under $50 monthly.
What Does E&O Insurance Cover?
Errors and omissions (E&O) insurance helps protect businesses from legal claims related to mistakes, negligence, or contract issues. If a client believes your service didn’t meet expectations, they may sue—this policy helps cover legal defense costs.
Key Coverage Areas
Work Mistakes & Oversights
A small professional error can cost a client money. If they sue to recover losses, E&O insurance helps cover legal fees.
Undelivered Services
If you fail to complete a project, disrupting a client’s business, they could sue—especially if it impacts their revenue.
Missed Deadlines
Late work can delay a client’s business plans. If they take legal action, E&O insurance helps cover the lawsuit.
Cybersecurity & Data Leaks
Tech professionals can get a bundled Tech E&O policy, which combines E&O and cyber insurance to cover risks like data breaches.
Breach of Contract
If a client claims you didn’t fulfill a contract as agreed, E&O insurance helps protect against contract-related lawsuits.
Misrepresentation
If a client accuses you of misleading them, such as exaggerating expertise, they might sue. E&O insurance can cover these legal costs.
Who Needs Errors & Omissions (E&O) Insurance?
E&O insurance is essential for businesses and independent contractors who provide services based on their expertise. Many industries require this coverage to meet client demands or comply with state regulations.
Industries That Often Need E&O Insurance:
IT Professionals
Tech experts usually get technology errors & omissions insurance (tech E&O), which includes both E&O and cyber insurance. This covers legal disputes over contract breaches, coding mistakes, and data security issues.
Example: A client hires an IT consultant to secure customer data, but a data breach exposes sensitive details. The client sues, claiming negligence.
Insurance Agents
E&O insurance protects agents against claims related to misrepresentation, bad advice, or coverage gaps. Some states require agents to have this policy before they can operate.
Example: An insurance agent promises a client full auto coverage but fails to secure the policy. After an accident, the client finds out they’re uninsured and sues the agent.
Real Estate Agents
Some states mandate E&O insurance for real estate agents and brokers. It covers disclosure errors, failure to close deals, and mismanagement.
Example: A real estate agent lists a home’s square footage incorrectly. After the sale, the buyer realizes the mistake and sues for damages.
Professional Services
Notaries, travel agents, and recruiters rely on their industry knowledge to advise clients. A small miscalculation or poor advice can lead to financial losses or legal disputes.
Example: A travel agent misbooks flights for a business trip, causing major financial losses. The client sues for compensation.
Tax Preparers
E&O insurance helps tax professionals handle lawsuits related to missed deadlines, calculation mistakes, or lost documents. Some clients require proof of insurance before working with a tax preparer.
Example: A tax preparer fails to submit a client’s return on time, leading to a hefty IRS penalty. The client sues for reimbursement.
If your work involves expert advice, contracts, or client services, E&O insurance is a must!
How to Get Proof of Errors & Omissions (E&O) Insurance?
Getting proof of E&O insurance is quick and simple. Just follow these steps:
- Fill out an online application – Answer a few questions to receive free quotes from top insurance providers.
- Get expert advice – Eagle Nation’s insurance agents can help you find the best E&O coverage for your business.
- Receive your certificate – Once approved, you’ll typically get a copy of your E&O insurance certificate on the same day.
What Errors & Omissions (E&O) Insurance Does Not Cover?
While E&O insurance helps protect against client lawsuits, there are certain exclusions. It does not cover:
- Lawsuits You File – E&O only covers defense costs if a client sues you, not lawsuits you initiate.
- Intentional Mistakes – If an error was made on purpose, your policy won’t cover it.
- Claims Before Policy Activation – Unless you have prior acts coverage, E&O insurance only covers incidents after the policy starts.
Other Exclusions:
- Customer Injuries & Property Damage – Covered by general liability insurance.
- Employee Injuries – Handled through workers’ compensation insurance.
- Discrimination & Harassment Claims – Covered by employment practices liability insurance (EPLI).
- Illegal Activities – Any fraudulent or unlawful acts are not covered.
- Business Property Damage – Requires commercial property insurance.
- Business Vehicles – Needs commercial auto insurance or hired and non-owned auto insurance (HNOA).
- Product-Related Harm – Handled by product liability insurance, usually included in general liability coverage.
Two ways to start your coverage
Quotes online
Talk to an agent
Verified errors and omissions in coverage reviews
Hear from customers like you who purchased insurance.
FAQs about Errors & Omissions Insurance
Errors and omissions (E&O) insurance and general liability insurance cover different risks, and many businesses benefit from both. General liability insurance protects against common incidents like customer injuries or slander claims.
In contrast, E&O insurance covers professional negligence that could financially harm a client. If your business provides expert advice or services, E&O coverage is essential to safeguard against potential lawsuits.
Small business owners may need E&O insurance in the following situations:
- State Requirements – Some states mandate E&O coverage for certain professions, like real estate agents.
- Client Contracts – Many clients require proof of E&O insurance before signing a contract to protect themselves from potential legal costs.
- Licensing Requirements – If your profession requires a license, your state licensing board may demand E&O coverage as part of the process.
- Risk Management – Even if not required, E&O insurance is crucial for protecting your business. A single mistake or oversight could result in a lawsuit that might cripple your company.
Errors and omissions (E&O) insurance and professional liability insurance refer to the same type of coverage but are known by different names depending on the profession. E&O insurance is commonly used by insurance agents, real estate agents, tax preparers, and IT professionals. On the other hand, architects, consultants, construction companies, and photographers typically refer to it as professional liability insurance.
In the legal and healthcare fields, this coverage is called malpractice insurance—lawyers use the term legal malpractice, while doctors and healthcare professionals call it medical malpractice insurance. Regardless of the name, the purpose remains the same: to protect professionals from lawsuits related to mistakes, negligence, or failure to meet client expectations.
- Covers Legal Defense – E&O insurance protects you if a client claims you were negligent or didn’t meet expectations.
- Filing a Claim – To make a claim, contact your insurance provider with details like your policy number and incident information.
- Claims-Made Policy – Your policy must be active both when the incident happened and when the claim is filed to be eligible for coverage.
- Retroactive Date – When buying a policy, you can set a retroactive date to cover past work, ensuring previous projects are protected.
- Continuous Coverage – Keeping your E&O policy active prevents gaps in coverage, so you don’t end up paying legal fees out of pocket
To learn more about errors and omissions (E&O) insurance, check our FAQs for common questions. For personalized guidance, you can also contact an Eagle Nation agent to explore coverage options and get quotes from trusted providers.
E&O insurance is a must-have for anyone providing expert services. It gives me peace of mind knowing that if a client claims an error or misses the deadline, my legal costs are covered!