Errors & Omissions


Errors and Omissions Insurance

Errors and Omissions insurance (E & O) is professional liability insurance. It protects employees and companies from inadequate or incomplete work by professionals. E & O is liability insurance. Errors and Omissions insurance rarely covers certain liabilities and/or criminal prosecution. The cost of an E & O policy varies with many factors. These factors include the business covered, the business location, and whether there have been claims previously paid out. Coverage limits and the number of employees covered affect the cost of E & O insurance.

Errors and Omissions insurance is for anyone who has errors and omissions exposure. Besides lawyers and accountants, advertising agencies and web hosting companies may need E & O coverage. If you offer services to clients for a fee, you have exposure. When considering E & O insurance, think about the ramifications if the service is not completed on time or incorrectly. Think about how much it will cost or how much it will harm a company’s reputation. For example, what if a wedding planner plans for a wedding on the wrong date? The reception hall is rented and the music and caterers are coming on the wrong date. Who pays for this? This illustrates one application of errors and omissions insurance.

Claims from an errors and omissions policy must be made and reported within the policy period designated in the policy. Usually, the policies contain a retroactive date. This date is important because it helps delineate the time limit covered by the policy. Some policies exclude punitive damages and cover defense expenses. There are different E & O coverages: coverage for negligence, coverage for defense costs, and coverage for copyright infringement.

There are several major benefits of E & O insurance. They include less financial uncertainty, legal advice availability, less stress for you, and asset preservation. These benefits come at a cost, and must be weighed by each company or professional.