What is E&O Insurance?
E&O stands for Errors and Omissions insurance and professional liability insurance, which helps to protect you from any lawsuits claiming you have made a mistake in your professional services. Any court costs or settlements, which can be very costly for a business to pay on its own, are covered in the insurance.
What does E&O Insurance cover?
The following below are covered in the Errors and Omissions insurance:
- Errors in services given
- Violation of good faith and fair dealing
- Inaccurate advice
If for any reason, your business is sued for making a mistake in any of the professional services you provide, the insurance can cover the following:
- Attorney fees
- Court costs
- Administrative costs
- Settlements and judgments
Errors and Omissions insurance can help cover claims that have been made if:
- The claim is filed within the policy period or the extended reporting period
- The incident occurred on or after the retroactive date
The retroactive date considers any incidents that happen on or after a certain date in the policy and are eligible for coverage. The extended reporting period helps cover claims that are filed within a certain period of time after your policy expires.
Why Do You Need Errors & Omissions Insurance?
Your business could be a risk of closing if you are unable to cover the cost of expensive claims without any errors and omissions insurance taken out. Even if a claim if put in, then dropped, legal expenses can still reach up to thousands of dollars. Furthermore, if you’re found at fault or agree to settle the claim out of court, you can still expect to pay a large amount out of pocket.
Errors and omissions coverage is important to protect your business.
Who Needs E&O Insurance?
Businesses that provide the following services to customers are recommended to take out Errors and Omissions insurance:
- A Accountants
- Engineers and engineering firms
- Advertising firms
- Marketing firms
- Website developers
- Consulting companies
- Barbershops and hair salons
- Printing and publishing companies
- Pet services, such as veterinarians and pet groomers
What Errors and Omissions Insurance Doesn’t Cover
Any claims from events that were put in before the policy’s retroactive date are not covered by the Errors and Omissions insurance and any claims that are filed after your policies extended reporting period.
Not all types of liability claims are covered and the following claims made on your business will also not be covered by Errors and Omissions insurance:
- Any acts or purposeful wrongdoing that are illegal or and purposeful wrongdoing, such as intentionally breaking the law or deceiving your customers or clients.
- Bodily injury or property damage that your business causes. These types of claims will need a general liability insurance policy.
- Employee injuries or illnesses caused because of their work.
- Discrimination or harassment in the workplace that your employees file, this will need employment practices liability insurance.