What is errors and omissions insurance (E&O)?
Errors and omissions, a form of professional liability insurance, is designed to protect employees and employers against clients' claims of negligence, errors, omissions, or inadequate work.
Is professional liability the same as errors and omissions?
Yes, professional liability and E&O insurance refer to the same type of coverage. E&O policies usually cover legal defense costs, settlements, and judgements, up to the policy’s limits. In many advisory and service-based industries, lawsuits can arise even when the professional’s work meets industry standards, as clients may perceive mistakes or miscommunication that lead to financial loss. Whether or not the claims are valid, E&O insurance helps safeguard professionals from the high costs of defending against such allegations and potential reputational damage.
For example, an insurance agent could be sued by a client who alleges that the agent failed to properly advise them about their policy coverage, and they suffered a significant loss that their policy didn’t cover. Even if the agent is ultimately found not at fault, defending against the claim could result in high legal fees and court costs. In such situations, errors and omissions insurance could help protect the agent financially, covering legal expenses and potentially preventing a devastating financial impact on their business. Get a customized quote for your business to see how much errors and omissions insurance costs.
Who needs errors and omissions insurance?
E&O insurance is useful whenever you or your employees offer professional advice or provide a service that a client could claim is inadequate or tied to negligence. The following types of businesses should consider purchasing errors and omissions insurance.
For example, if you are a real estate agent, you may find yourself facing a lawsuit if a homeowner finds defects in their new property after closing. The homeowner may allege you did not disclose the defects and may sue based on the diminished value of the home.
To illustrate another example, imagine that you are hired as a marketing consultant to help revive a struggling company. If the innovative techniques that you employ are not enough to keep the business open, the company’s owner may try to blame you and file a lawsuit.
No matter how baseless these claims are, they can leave your business with hefty legal fees – something that could be avoided with the purchase of an E&O insurance policy.
If you own a general liability or business owner's policy, it does not protect you from claims that you did something you shouldn’t have (an error) or didn’t do something you should have (an omission) as you provided your professional services. Errors and omissions insurance is necessary for proper protection against professional liability claims.
How much is errors and omissions insurance?
The cost of E&O coverage varies depending on several factors, including your business size, industry, location, and the amount of coverage you need. E&O insurance from Hiscox starts at $22.50 per month, but rates can differ based on your unique risk profile. The examples below show the cost for two consultant businesses in California and Texas.
You can also save up to 5% with Hiscox by bundling E&O insurance with other essential policies like general liability or a business owner’s policy (BOP). Bundling coverage not only offers added protection but can also help lower your monthly premium, giving you more value for your investment.
| IT consultant | Business consultant | |
|---|---|---|
| State | CA | TX |
| Annual Revenue | $150,000 | $350,000 |
| Limit | $500,000 | $1,000,000 |
| Deductible | $5,000 | $5,000 |
| Monthly Cost | $42.92/mo.* | $85.42/mo.* |
| Annual Cost | $515* | $1,025* |
*Costs shown are illustrative. Your premium may vary based on your business profile. For an estimate tailored to your business, answer a few simple questions and get a quote today.
Example professions we insure
Is errors and omissions insurance legally required? Do I need it?
While not all types of businesses are required by law to carry an E&O policy, some professionals are required by regulatory or licensing boards within their profession to have it. In many states, for example, real estate agents are required to show proof of E&O coverage before they receive their licenses. While local or state laws may or may not expressly require some types of professionals to carry E&O coverage, other laws regarding their duty of care to clients make it a necessity. Additionally, you should seriously consider errors and omissions coverage if your business provides a professional service or regularly gives advice.
What does errors and omissions insurance cover?
What does errors and omissions insurance not cover?
At Hiscox, we want you to fully understand what you’re buying. Below are the key exclusions of your E&O insurance policy. For a complete list of exclusions, please review your policy wording.
- Employment practices and workers compensation. Your policy doesn't cover claims related to employment practices (such as wrongful termination or discrimination) or any workers’ compensation claims or employer's liability claims.
- Fraud, dishonesty, or criminal acts. E&O insurance does not protect against any fraudulent, dishonest or criminal acts. However, Hiscox will defend you until such acts are proven in court. If they are, you’ll be required to reimburse us for those defense costs.
- Bodily injury or property damage. Your E&O policy doesn't cover physical injuries (like slip-and-fall accidents) or damage to someone’s property. For this type of protection, consider general liability insurance.
- Personally identifiable information (PII). E&O coverage excludes claims arising from a failure to safeguard PII in your care, custody or control.
- Patent infringement and trade secrets. Claims of patent infringement or theft of trade secrets are not covered by your E&O policy.
- False advertising. Errors and omissions insurance does not cover false advertising claims.
- Excluded services. Your policy covers only the services listed in the policy’s services endorsement. Claims arising from other services are not covered.
Get liability insurance that best meets your needs
Your business may need more than one insurance policy. When you tell us about your business, we’ll recommend the right coverage for you. Get a quote today.
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General Liability
The foundational protection for claims against your business.
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Professional Liability (E&O)
Indemnity protection for specific risks in your field.
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Business Owner's Policy
General liability plus coverage for property.
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Cyber Security Insurance
Protection from cyber-related security risks.
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Workers Compensation
Protection for employees who are injured or become ill on the job.
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Commercial Auto
Protection for your business and work vehicles.
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Short-Term Liability
Purchase coverage for a specific period of time.
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Medical Malpractice (E&O)
Protection for claims against your medical practice.
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More Coverages
Umbrella, Property, Inland Marine, and more.
Errors and omissions insurance FAQs
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