E&O insurance, or Errors and Omissions insurance, is a type of liability insurance that protects professionals from claims of negligence or failure to perform their duties. It provides protection against financial losses caused by errors, omissions, or negligence in the performance of professional services. Professional services can include accounting, consulting, engineering, appraising, and many other professions. E&O insurance is also sometimes referred to as Professional Liability Insurance.
What Does E&O Insurance Cover?
E&O insurance provides coverage for claims of negligence or failure to perform professional duties. This includes protection from claims of financial losses resulting from errors, omissions, or negligence in the performance of professional services. It also typically covers legal defense costs, settlements, and judgments. Coverage may vary depending on the specific policy and the type of profession.
Who Should Have E&O Insurance?
E&O insurance is typically purchased by businesses and professionals who provide services to customers. This includes consultants, accountants, appraisers, engineers, architects, IT professionals, and many other professions. Even if you are confident in your abilities and take all the necessary precautions when performing your services, you can still be sued for negligence or breach of contract. E&O insurance provides protection from these types of claims.
What Does E&O Insurance Cost?
The cost of E&O insurance varies greatly depending on the type of profession, the coverage limits, and the size of the business. Generally speaking, the cost of E&O insurance is based on the amount of coverage purchased, the type of profession, and the size of the business. Most professional liability policies have a deductible, which is the amount that must be paid out of pocket before the insurance company begins to pay. Deductibles can range from $500 to $25,000 or more depending on the policy and the size of the business.
What Are Some Examples of Claims Covered By E&O Insurance?
E&O insurance typically covers claims of negligence or failure to perform professional duties. This includes claims of financial losses resulting from errors, omissions, or negligence in the performance of professional services. It also typically covers legal defense costs, settlements, and judgments. Some examples of claims typically covered by E&O insurance include:
- A customer suing for financial losses caused by delayed services.
- A customer suing for financial losses caused by an error in a court filing.
- A customer suing for financial losses caused by an incorrect appraisal.
- A customer suing for financial losses caused by a breach of contract.
What Should I Look for in an E&O Insurance Policy?
When shopping for E&O insurance, there are several things to consider. First, consider the type of profession and the type of services provided. Different policies may have different coverage limits and exclusions, so it’s important to read the policy carefully. It’s also important to consider the cost of the policy and any deductibles that may apply. Finally, it’s important to make sure the policy offers the coverage you need and is provided by a reputable insurance company.
Is E&O Insurance Worth the Cost?
E&O insurance is an important and necessary form of protection for businesses and professionals who provide services to customers. The cost of the policy depends on the type of profession and the coverage limits, but the cost is typically a small fraction of the potential financial losses from a lawsuit. In addition, many professional organizations require E&O insurance, so it’s important to have the coverage if you are a member of a professional organization. Overall, E&O insurance is well worth the cost for the protection it provides.