Do I need Errors and Omissions Insurance?

If you are in the business of providing a service to your clients for a fee, you have an Errors and Omissions (E&O) exposure and should consider Errors and Omissions Liability Insurance.

What is E&O insurance? 

E&O insurance, also referred to as professional liability insurance, covers businesses or individuals in the event that a client holds such company or individual responsible for a service that was provided, or failed to be provided, and did not have the expected or promised results. In very basic terms, it protects you when you perform a service for your client and they claim it was done incorrectly and caused them harm. Most E&O policies cover defense costs and any resulting settlements and judgments against you or your company, up to the coverage limits on your policy. Your Commercial General Liability policy does NOT provide this coverage.

Who needs E&O Insurance?

Any company that is in the business of providing a service to clients for a fee faces an E&O exposure. Some of the more common professions which need E&O insurance are real estate agents, architects, engineers, doctors, lawyers, IT consultants, and accountants to name a few. The list of professions is a lot more extensive. If you are in doubt as to whether you might need it, consult with your insurance agent.  

Why do I need it? 

For one, E&O is excluded on general liability insurance policies. More importantly, mistakes are inevitable for any business or individual. Nobody’s perfect.

Here are some claim scenarios courtesy of Philadelphia Insurance Company

When should I buy E&O insurance?

The best time to buy errors and omissions insurance is before you begin practicing. If you know you have an exposure, make E&O insurance part of your insurance program before conducting business. 

I will be covering more aspects of E&O insurance in future blogs and how it differentiates from general liability insurance. There is no such thing as “one size fits all” in an E&O policy. These policies are customized and tailored to each and every business. It is very important that your insurance agent understands E&O coverage and the marketplace. Neither you nor your business can afford to get it wrong.

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About Jimmy Kinmartin - Business Insurance & Risk Management Broker

Jimmy is a California licensed Property & Casualty AND Accident & Health insurance agent working at the ISU - Olson Duncan Insurance brokerage in Torrance, CA. He grew up in Fullerton, CA and graduated from Servite High School in Anaheim and Loyola Marymount University in Los Angeles and currently lives in Tustin, CA. Have questions? Just ask! Or, follow Jim on Twitter at @JimKinmartin

3 responses to “Do I need Errors and Omissions Insurance?”

  1. Errors and Omissions Insurance says :

    Hey! here is a good video & information. Really i like it, Because you done that thing which no one can do.

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