Errors & Omissions Insurance Explained: What It Covers and Who Needs It
Errors & Omissions (E&O) insurance—also known as professional liability insurance—is one of the most overlooked yet essential protections for service-based professionals. It safeguards your business from costly lawsuits stemming from mistakes, oversights, or claims of negligence—even if those claims turn out to be unfounded.
Why E&O coverage is so important
Mistakes happen, even to the most experienced professionals. Here are a few real-world examples:
A printer misspells a groom’s name on hundreds of custom wedding invitations.
A plumber’s faulty repair leads to major water damage in an office building.
A manufacturer delivers a product that doesn’t perform as promised, and the client sues for breach of contract.
A web developer fails to renew a client’s domain, resulting in lost business and reputational damage. The client demands compensation, and the E&O policy responds to the claim.
In each case, E&O insurance helps cover legal defense costs, settlements, and damages. Without it, you or your business could be left paying these expenses out of pocket—something that can easily threaten your financial stability.
What E&O insurance covers
E&O coverage is designed to protect you or your company from claims that arise from professional errors, omissions, or negligent work. It typically includes:
Claims of negligent work: Protection against real or perceived mistakes that result in financial loss for your client.
Judgments and settlements: Coverage for court-ordered payments or settlements if you’re found liable.
Defense costs: Payment for legal fees and court expenses—even if the claim has no merit.
How E&O differs from general liability
While general liability insurance covers bodily injury, property damage, and other third-party risks, it does not protect you from claims tied to your professional services.
So, if a client alleges you gave bad advice, made an error in your work, or failed to deliver as promised, general liability won’t respond—E&O will. Think of E&O as filling the gap between your professional expertise and potential financial exposure.
Do you need E&O insurance?
You likely do if any of the following apply:
You provide services or advice for a fee.
Your clients require E&O coverage in contracts.
You offer professional expertise (consulting, design, legal, accounting, or technical work).
Even if you pride yourself on quality and precision, we live in a litigious world where misunderstandings or unrealistic client expectations can turn into legal battles. E&O insurance offers peace of mind, ensuring you can defend your reputation and protect your finances.
Getting covered
When applying for E&O coverage, insurers will want to understand your operations and risk controls. Be prepared to provide:
Resumes or bios showcasing your qualifications and experience.
Sample contracts that outline your scope of work and disclaimers.
Financial statements showing business stability.
Quality control procedures demonstrating how you reduce risk.
Providing clear, accurate information helps your agent match you with the right insurer and coverage limits tailored to your business.
At Wang Insurance, we help consultants, contractors, creative professionals, and small businesses secure the right E&O protection for their industry.
Ready to get started? Contact our team today to review your options and ensure you’re fully covered.
