The basics

What is errors and omissions insurance?

In a nutshell, errors and omissions insurance (aka professional liability insurance) is insurance protection against unhappy clients.

Errors and omissions insurance covers professional mistakes (errors) and things you may have overlooked (omissions). Even if you’re always on the ball, at some point you may have a client who claims they have suffered a financial loss as a result of your work. And even if it’s not your fault, you will have to defend yourself.

Who needs errors and omissions insurance?

If you’re in the business of providing services or advice to clients for a fee, you’ll need it. Because each profession has its own unique risks, this coverage will be specific to your industry.

What does it cover?

E&O policies cover financial or economic losses from third-party clients. A client can initiate a lawsuit even if you’ve done nothing wrong. If you don’t defend yourself, you risk a “default judgement” (which means you have to pay whatever they say you owe). And that’s a real problem.

E&O claims examples

  • A business consultant is hired by a company to reorganize staffing and budgets. Fifteen months after the reorganization, the client claims the solution had a negative impact on the budget. The client sues for negligence, which results in over $100k of settlements and defense costs.
  • The final product is shoddy, due to lost data or broken file storage.
  • A disgruntled client sues over poor results on a marketing campaign.

Even if a poor outcome isn’t exactly your fault, your client can still hold you responsible.

Why invest in E&O coverage?

The main benefits of having errors and omissions insurance are asset and integrity protection, as well as defense and damages costs (should a client decide to take you to court).

Coverage highlights

Professional mistakes
This could be any mistake, big or small, that hurts your client’s business or reputation in any way.
Professional negligence
In other words, your client thinks your work doesn’t meet the professional standards of the industry you’re in. Even if it’s subjective, they can still file a suit against you.
Failure to deliver services
You make a promise, like boosting sales (or any type of commitment, really), and it doesn’t happen for some reason.
Court costs
This includes attorney’s fees, judgements, and settlements if a client takes you to court.

Price factors

How much does errors and omissions insurance cost?

Low-risk businesses might pay somewhere around $600 a year on average. However, the cost of errors and omissions insurance can vary based on the following factors:

Your profession

Someone working as an architect has a higher risk of monetary loss than a data entry professional.

The state you work in

Each insurance carrier sets its own insurance rates per state, and some are higher than others.

The number of claims your industry as a whole tends to have

Insurance companies use this information to help determine the cost of your insurance.

The only way to find out exactly how much errors and omissions will cost you is to get a free quote. We compare over 30 top insurers to find you the most affordable coverage.