Errors & Omissions (E&O) Insurance

In an ideal world, there wouldn’t be any need for Errors & Omissions (E&O) insurance; but as well all know, mistakes happen. That’s why every business or professional that provides services to clients should have an E&O policy.

Errors & Omissions, sometimes referred to as professional liability insurance, covers organizations, and their employees, from lawsuits claiming that you (or your organization) made a mistake while providing professional services. From attorney fees to settlements, an E&O policy can protect your business from costly expenses.

Serving clients nationwide since 1994, HCP National‘s expert brokerage can help you find the best Errors & Omissions Insurance for your situation, while working within your budget.

What is E&O Insurance Coverage?

E&O insurance protects professionals and businesses from expenses, such as court costs and settlements, relating to claims about negligence, errors, omissions, bad-faith and unfair dealings, inaccurate advice, and misrepresentation.

It’s not uncommon for dissatisfied clients to sue professionals for mistakes such as errors, inaccuracies, omissions, and negligence. According to the American Medical Association, nearly 1 in 2 physicians have been sued for medical malpractice by the time that they turn 55 years old – and this is just the medical industry. All professions are subject to professional liability suits.

Types of Businesses that Require E&O Insurance

All businesses that provide services to customers should have errors and omissions insurance. Some examples include:

Of course, this is not an exhaustive list of the types of professionals and organizations that should have E&O insurance.

What E&O Insurance Covers

Errors and omissions insurance can cover you or your business from the following claims:

If an individual or organization sues you for any of the above claims, your E&O policy can cover:

It’s also important to note that a claim may only be covered if it is filed within your policy period (or your extended reporting period) and if the related incident occurred on or after your policy’s retroactive date.

What E&O Insurance Doesn't Cover

E&O insurance is not a comprehensive policy to cover all of your professional risks. Typically, E&O policies will not cover:

Illegal or criminal acts
Malicious acts or purposeful wrongdoings
Property damage (for this, you need a General Liability policy)
Bodily injury (for this, you need a General Liability policy)
Data breaches (for this, you need a Cybersecurity policy)
Employee injuries (for this, you need a Workers' Compensation policy)
Claims of discrimination or harassment (for this, you need an Employment Practices Liability policy)
Incidents or claims that took place before your policy's retroactive date

To be sure what your specific E&O insurance does and does not cover, read your E&O policy’s wording and consult your attorney.

Errors and Omissions Insurance Cost

E&O insurance policy costs very based on a number of factors, such as:

Claims history: If you have a history of lawsuits and claims brought against you or your company, your E&O insurance premium will be higher than if you have no claims history.
Location: The state you practice in can affect the amount you pay.
Type of business: The industry you are in, the specific nature of your work, and their associated risks, can affect the cost of your E&O insurance. For instance, a small advertising firm’s E&O premium would likely be a lower than a small construction firm’s. This is because of the higher-risk nature of construction.
Business size: The bigger your business, the more your employees and contractors you have, and the more revenue you bring in, the higher your premium will be.
Coverage limits: Insurance policies with higher coverage limits and lower deductibles typically cost more than policies with lower limits and higher deductibles.

How to Determine the Cost of Your E&O

You cannot determine the cost, or an estimate, of your insurance yourself.

To determine what your E&O insurance will cost, request a quote from an expert insurance broker. Your broker will provide you with an insurance application, then they will go to market to find you the best coverage for your situation at the best price.

Serving clients nationwide since 1994, HCP National is an expert E&O insurance brokerage. Our goal is to help you minimize your professional risks by implementing the right insurance at an affordable price.

Is E&O Insurance Legally Required?

Not all professionals are required to carry E&O insurance, though some are.

Depending on where you practice, and your industry or professional, you may be legally required by the state and/or federal government to have E&O coverage.

In addition to legislative requirements, some regulatory bodies require certain professionals to have E&O.

Client contracts may also require this coverage.

Why Do You Need Errors & Omissions Insurance?

Businesses should have errors and omissions insurance to protect themselves against the potentially high costs of service errors, omissions, and other mistakes.

Some examples of claims that could arise include:

Late work or product: an interruption in your supply chain or a delay in the delivery of your services to your customer (even if it is out of your control) could result in a claim
Poor communication: even if you accurately communicate your prices and deliverables, your customer could misunderstand, or form their own unrealistic expectations, and file a claim when their expectations are not met
Clerical errors: a typing, auto-correct, or other clerical error in an email, purchase order, contract, shipping address, or email address could result in miscommunications, delays, and other loss or damage.

There are endless examples of claims that could arise due to negligence, omissions, and other professional errors.

Without an E&O policy, the cost of a claim could be so expensive that your business would be in danger of closing permanently.

If you provide any services to customers, it behooves you to carry E&O insurance.

Get an E&O Quote Now

Any company that doesn’t have E&O insurance is taking a risk. It’s not a question of your experience, expertise, or caliber. Everyone makes mistakes – and sometimes, factors outside of your control can cause claims to arise. From legal costs to settlements, the financial impact of uninsured errors and omissions claims could seriously impact your business – and the livelihoods of yourself and your employees.

Partnering with the right insurance brokerage to find the best possible E&O insurance is critical for your business. It can provide you with the peace of mind that your business can withstand any E&O claim made against it, so you can continue to do your best work. Get a quote now.

For more than two decades, HCP National‘s priority has been helping clients find the best insurance solutions for their businesses and budgets. HCP National is also proud to be one of the largest independent brokerages in the country, led and owned by a certified minority woman.

E&O Insurance FAQs

Here are some of the frequently asked questions about E&O insurance.

Is E&O insurance necessary?

Yes, E&O insurance is necessary for professionals and organizations that provide services and advice to customers. Examples of professionals who should have E&O include lawyers, doctors, accountants, consultants, engineers, real estate agents, insurance agents, and more.

Is E&O insurance worth it?

Yes, E&O insurance is worth it. It covers your business in any suit against it relating to service negligence.

What is something that an E&O policy can cover?

An E&O policy can cover court expenses, judgments, settlements, and damages that are too expensive to be paid on your own as a business.

What does error and omissions insurance cover?

Error and Omissions Insurance can cover lawsuits claiming errors, oversights, or mistakes in the work/services provided; omissions; negligence; inaccurate advice; misrepresentation; bad-faith dealings; unfair dealings; breaches of contract; failure to meet deadlines; failure to deliver agreed services.

What is the most common E&O claim?

The most common E&O claim is misrepresentation, usually due to miscommunication, negligence, or omissions.

Does revenue generated affect the E&O insurance policy?

Yes, the revenue generated by a business can impact its E&O insurance policy. As the revenue increases, so does the cost of E&O insurance coverage. The saying “more money, more problems” can explain why, since larger businesses have more risks and are more likely to face lawsuits.

NOTE: ALL OF THE ABOVE IS A GENERAL DISCUSSION ABOUT HOW E&O COVERAGE MAY WORK. YOUR INSURANCE POLICY, AND ALL ADDENDA, ARE THE ONLY AUTHORITY OF HOW YOUR COVERAGE WORKS. DO NOT RELY ON THIS PAGE AS AN EXPLANATION OF YOUR COVERAGE. HAVE YOUR ATTORNEY REVIEW YOUR ENTIRE POLICY WITH YOU TO DETERMINE WHAT IS AND ISN’T COVERED.

Ready to get started? Request a quote now.

Since 1994 – HCP’s top priority is finding clients the best possible coverage and terms at the lowest possible cost. HCP is a certified diverse (MBE & WBENC) insurance brokerage.