Errors & Omissions (E&O) Q & A

E&O Insurance Basics
Errors and omissions insurance (E&O) covers the company, or the individual, in the event that a customer holds the individual liable for a service provided, or failed to provide, that did not have the expected or promised results. For doctors, acupuncturist, dentists, nurses, chiropractors etc., it is often known as malpractice insurance. For lawyers, professional consultants, personal trainers, accountants, architects or engineers, it may be called (or known as) professional liability. The standard business owner policies (BOPs) does not cover client claims of negligence. Basically, E&O coverage provides protection in the event that an error or omission has caused a financial loss to a client or customer.

In addition to covering losses and legal expenses (up to set limits), E&O insurance can also be used to contest slander, libel, and breach of contract. Whether you are a large or small business or just an individual working out of your home, you risk serious financial loss if you are not insured. If you provide a service to your clients for a fee you have Errors and Omission (E & O) exposure. You may already have traditional Commercial Liability Insurance but are you may still be vulnerable to claims of personal negligence. Professional liability related to an error or omission is not covered by General Liability Insurance.

There are specific forms of errors and omissions insurance available for a variety of licensed professions, including chiropractors, nurse contractors, real estate agents, independent consultants, appraisers, designers, home inspectors, acupuncture professionals, massage therapists, notaries and much more. Most E&O policies cover judgments, settlements and defense costs. Even if the allegations are found to be groundless, thousands of dollars may be needed to defend the lawsuit. They can bankrupt a smaller company or individual and have a lasting effect on the bottom line of larger companies.

Types & Costs of E&O coverage?

There are no "standard" policy wordings for E&O coverage. Each policy must be read carefully to make sure that the coverage being offered fits your exposures. An attorney, a massage therapist and a home inspector all have exposures; however, they are different exposures and would need different policies.

Many E&O policies are on a "claims made" or basis, meaning any claims must be made within the policy period and their retroactive date becomes very important. As you can imagine, claims that arise from events prior to the retroactive date will not be covered. The farther back the retroactive date, the more coverage provided. Additionally, some policies include the defense expenses within the limit of liability or will exclude punitive damages - which is why it is crucial that these policies be read very carefully to make sure the coverage fits the exposure. For more information on Insurance Terms, you can visit Insurance Terms Glossary.

How much E&O insurance costs you will differ significantly depending on the type of business you are, your past claims history, the location of your business / home office and obviously from insurer to insurer. An insurance company that is very competitive on insurance brokers or real estate agents, may not be competitive, or may not even offer coverage or nurse practitioners or chiropractors, so researching business insurers can be a lengthy process.

Hopefully this information has helped you with understanding E&O Insurance. Need help finding & comparing business Insurance quotes? At FindInsurance, find the best value for business insurance to meet your needs. Learn how to upgrade your business insurance policy and better protect your company's interests. Review free business insurance quotes and detailed information on your business insurance options, including...

• Business Owners Insurance
• Directors & Officers (D&O) Insurance
• Errors & Omissions (E&O) Insurance
• Professional Liability Insurance
• Malpractice Insurance
• Workmans Compensation