What is the Errors and Omissions (E&O)? (E&O)?

Errors and Omissions insurance (E&O) is a kind of insurance for professional responsibility which protects employers, their employees as well as other professionals from allegations of poor work or negligent acts.

Errors and Omissions Insurance (E&O)

Key Takeaway

  • Insurance for errors and omissions is a type of professional insurance for liability.
  • E&O insurance shields businesses and professionals from accusations of insufficient work or negligent acts committed by customers.
  • Anyone who performs services requires E&O insurance, including insurance agents, financial services and doctors, lawyers, and wedding coordinators.

What Does E&O Insurance Cover?

Errors and Omissions insurance can help safeguard your business from claims for:


Service delivery is not error-free.



A violation of morality and fair handling

Inaccurate advice

If someone sues your company because of a mistake made with the expert services that you’ve provided the insurance will you:

Attorney costs, can cost an average of $150,000 to $3,000.

Costs for court, like reserving a courtroom or paying for expert witnesses.

Administrative expensesto build your defense, for example, paying office managers, or court reporters.

Settlements and judgements are costly, and can range from thousands to million of dollars.

Insurance for errors and omissions will cover claims when:

It’s filed during your policy’s time frame or extended reporting period.

The incident occurred within the time period following your retroactive date.

The retroactive date indicates that events that occur on or within a certain time frame within your policy are eligible to be covered. The extended reporting period can help to cover claims that are filed within a specified period of time after the policy is canceled.

Why do you require Insurance for Errors and Omissions Insurance?

Without insurance for errors and omissions and liability insurance, the costs of claims could be so costly that they cause your business to be at risk of being forced to close. Even if a customer decides to withdraw their claim, the legal costs can still amount to hundreds of dollars. If you’re found to be in the wrong or agree to settle the dispute outside of court, you’ll be required to be required to pay an enormous amount of money out of your pocket.

This is why it’s crucial to safeguard your business by ensuring the coverage of errors and omissions.

Who is in need of E&O Insurance?

The companies that provide services to their clients should have insurance for errors and omissions. This is a requirement for:


Engineering firms and engineers

Advertising agencies


Marketing firms

Website developers

Consulting companies

Hair salons and barbershops

Publishing and printing companies.

Pet services, like groomers and veterinarians

What errors and omissions insurance does not cover?

Insurance for errors and omissions doesn’t assist in settling claims arising from events that occurred before the policy’s retroactive date. It doesn’t also help your company with claims that are filed following the prolonged reporting deadline.

Be aware that a policy of errors and omissions do not provide coverage for every legal claim. It won’t aid your business in the event of:

Illegal actions and deliberate wrongdoing, for example, like breaking the law , or deceiving your clients or customers.

Bodily injuries as well as property loss caused by your business. For such types of cases, you’ll require an insurance policy for general liability.

Injuries or illnesses of employees caused due to their work. Workers’ compensation insurance policy could provide your employees with benefits to aid in recovering from work-related injuries or illness. It is important to know that many states require this insurance if you employ employees.

The harassment or discrimination in the workplace, which your employees are required to file. Employer practices liability insurance can in the case of these claims.

Cost of Errors and Omissions Insurance

Every business has different requirements therefore, your insurance policy for errors and omissions is priced unique to your business. But, regardless of what you cost, when you think about the impact of errors on your company and the financial burden of a premium for insurance is well worth it.

You can keep your insurance costs down by:

Training your employees

Examining your contracting system to ensure quality control

Contacting customers frequently on issues to make sure they’re happy