Professional Liability Insurance

Errors & Omissions Insurance: A Cost-Effective Approach to Protecting Your Business

It’s a good news, bad news situation. The bad news: Lawsuits- once a measure of last resort- are now commonplace in settling disputes. The good news? You can protect yourself, and your business and reputation, by investing in professional liability coverage, also known as Errors and Omissions (E&O) insurance.

General Liability insurance only provides indemnification for claims of bodily injury and/or property damage alleged by a third party to have been caused by your business. It provides no coverage for claims alleging other losses (such as monetary loss) where there is no bodily injury or property damage.

E&O insurance is supplementary liability insurance that provides this important coverage in the event of a lawsuit due to a negligent act, error or omission. In addition to claims of error, omission, or negligence, it can also protect against slander, libel and breach of contract.

Who needs E&O coverage?

It is a very important coverage for anyone who gives advice, makes educated recommendations, designs solutions, or represents the needs of others. Service professionals, such as accountants, computer consultants, software developers, planners, architects, engineers, contractors, etc., are prime candidates for E&O insurance. Specialized forms of E&O coverage are also available to professions such as appraisers, real estate agents, insurance agents, home inspectors, notaries, and Lawyers.

E&O policy overview

E&O policies generally have both a limit per claim and an annual policy limit. The claim limit is the maximum amount paid for any single event, and the annual limit is the maximum paid in any one policy year. Typical limits range from $250,000/$500,000 (per occurrence/aggregate) to $2,000,000/$4,000,000 and differ depending on the type of business.

To be eligible for this specialized insurance, candidates normally have to have to provide proof of licensure in their “covered class of business” and a summary of their experiences in their particular field or line of work.

Count on the experts

There are many different forms of professional liability insurance and multiple factors to consider when purchasing E&O coverage for your business. Because there isn’t a standard policy, an experienced agent who understands your company and can knowledgeably design a policy to meet your needs is very important.