Errors and Omissions Insurance: What You Need to Know

What do you think of when you hear the term errors and omissions insurance? Do you think it’s important, or do you not really pay much attention? As an entrepreneur, especially one who’s part of the design community, it’s incredibly important to be aware of what errors and omissions insurance (also known as E&O insurance) can do for your business. Learn more about this kind of business insurance here!

What Is Insurance Errors and Omissions (E&O)?

An insurance policy covering professional negligence on an insured person’s part. Typically, claims are made in court by clients or other third parties who believe they have been harmed as a result of an error or omission on a professional’s part. Such errors may range from simple clerical mistakes to more serious, intentional misrepresentations. In order for a claim of E&O liability to be successful, it must be proven that (1) there was indeed an error or omission; (2) that such error or omission was due directly to negligence on behalf of the professional; and (3) that such negligence resulted in actual harm. As is true for most insurance policies, E&O policies will also usually contain sub-limits, meaning that anyone’s claim might not be covered above a certain amount.

Why Do I Need E&O Insurance?

E&O insurance (also called errors & omissions, or E&O) is coverage that protects your business from liability when someone claims you made a mistake. This usually happens in cases where you’re working on behalf of a client. For example, if you design a website for your client and they’re unhappy with it, they might decide that you accidentally designed it poorly on purpose. Without E&O insurance, your company would be liable for its damages. It’s important to note that errors are not always mistakes–they can also include bad advice or simply doing something incorrectly due to negligence.

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How Much Does E&O Insurance Cost?

Costs can vary wildly based on a number of factors, including how large your practice is, how many employees you have, what kind of products or services you sell, whether you operate internationally (and if so, which countries), etc. As a result, we suggest getting multiple quotes from various insurance providers to find out where you stand. That said, here’s an example for our purposes. Let’s say your E&O premium costs $1,000 per year. If that same policy cost $3,000 per year three years ago when you originally bought it—which isn’t unheard of—your premium likely went up 40 percent over that time period.

What Coverage Am I Entitled To?

If you’re an agent or broker, your Errors & Omissions policy should include coverage for defamation of character, fraudulent misstatement, and fraudulent inducement. If you’re a financial planner or some other type of professional advisor, your policy should protect against any errors or omissions that result in lost profits (known as business interruption coverage). Any losses that are covered by insurance should come out of your own pocket—in other words, you shouldn’t have to pay anything out-of-pocket if someone sues you. The insurance company will cover legal fees and any associated judgments from court awards.

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Can I Get Help with my E&O Insurance?

When you’re looking for help with your E&O insurance, it can seem like there are a lot of questions. Who do I contact? How much coverage do I need? Can they really help me out? We’re here to answer these questions so that you don’t have any doubts about buying E&O insurance in the future. Before we start digging into E&O insurance, however, let’s take a quick look at what an insurance policy is.

If you want some more details on how liability insurance can benefit you—and why you might want to consider purchasing some—make sure to check out our full guide before getting started! Okay, now let’s dig into what an E&O policy does! In order to understand why errors and omissions policies exist, we first need to discuss medical malpractice lawsuits. While medical errors happen all too often across many areas of healthcare—from hospitals through rehab centers and everything in between—malpractice claims also cost millions of dollars every year because doctors are held accountable when patients receive poor treatment or suffer injuries due to negligence or negligence during patient procedures.

Who are the Best Offices for Insuring My Business?

If you have business partners, you’ll need to think about errors and omissions (E&O) insurance. How much coverage do you need? Ask business owners in your industry what level of E&O coverage they have. But remember that there’s no one size fits all for E&O insurance policies; most firms work with at least two or three companies, each of which offers different packages. In other words, if you hear from multiple business owners that they get a certain policy from one company, don’t automatically assume that the same package is right for your firm. The same goes for a quick internet search.

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What Else Should I Consider When Getting an E&O Policy?

Before you buy an errors and omissions policy, take a close look at your state’s liability laws. If you’re registered as a professional in your field, make sure your E&O policy covers that profession. Also, note that many policies require you to have general liability insurance. Check with your agent to see if you can save money by getting both kinds of coverage from one company. This could reduce your premiums by up to 30%. Of course, no insurance is worth paying for if it doesn’t provide protection when you need it. Be sure to read your policy carefully before signing on the dotted line!


Well, that’s a quick overview of some errors and omissions insurance (E&O). What it is, why you need it, how much it costs. But don’t think we’re done! We’ve got even more in-depth posts for you on all sorts of subjects below. And if we don’t have something about your industry or niche… well let us know because that means we need to get on that!

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