Table of contents
- What is errors and omissions insurance?
- Do I need errors and omissions insurance?
- Who should consider errors and omissions insurance?
- What does errors and omissions insurance help cover?
- Can you prevent claims from happening entirely?
- Other types of coverage to consider
- Think errors and omissions insurance is what your business needs?
What is errors and omissions insurance?
Errors and omissions (E&O) insurance — sometimes referred to as professional liability insurance — helps protect you against claims of errors, omissions, or negligence in your work that results in a financial loss for your customer. Typically, E&O is part of a comprehensive insurance package that also includes a commercial general liability policy.
Do I need errors and omissions insurance?
If you’re a professional or small business that charges customers for services, expertise, or advice, you’ll want to consider E&O insurance — whether you operate out of a commercial building, work from home, or run your business online.
If a client sues you for a financial loss that resulted from an alleged error, omission, or negligence on your part, the right E&O policy can help to cover the costs of litigation, legal fees, and settlements (up to the insured amount).
Some of the consequences of operating without E&O insurance may include:
- Your company will have to shoulder the costs associated with the legal process and any financial losses that stem from the lawsuit, even if the judgement is in your favour. Could your bank account handle it?
- If you don’t have the funds to cover your legal costs, it could take a long time to recover financially, hindering the growth of your business. You could even be forced to sell or go out of business.
- A lawsuit can bring more than costly proceedings: legal trouble can cast a shadow on your business, potentially hurting your reputation with customers.
Who should consider errors and omissions insurance?
Any professional that provides services, expertise, or advice to clients would benefit from E&O insurance. This includes a broad range of professions, including:
- strategic consultants
- project managers
- IT consultants
- software developers
- marketing professionals
- copywriters
- photographers
- wedding planners
- interior designers
- career coaches
In some industries, E&O insurance may be a legal requirement. Even if E&O insurance isn’t a requirement, it still makes good business sense. If a client’s claim is unfounded or you’re not at fault, you’ll still have to defend your business in court — and you could be on the hook for thousands of dollars in legal fees. And if the court decides in your client’s favour, it could be a serious blow to your finances and your reputation.
What does errors and omissions insurance help cover?
E&O insurance covers a variety of mistakes that can occur during the normal course of work, including:
- Errors, mistakes, or oversights
- Inaccurate advice
- Failure to meet a deadline
- Failure to deliver a service as promised
- Professional negligence
- Breach of contract
- Libel and slander
E&O insurance can help cover legal fees, court costs, and settlements (if you’re found at fault), as well as other expenses incurred during this process. How much coverage you’ll need will depend on factors such as the type of services you offer, the size of your business, and the level of your risk exposure.
E&O insurance does not cover:
- General liabilities, such as slip-and-falls
- Intentional wrongdoing
- Illegal activity
Can you prevent claims from happening entirely?
While insurance is crucial to protect your business, nothing can eliminate risks altogether. But you can work to mitigate them, and we can help you! This is where the Federated Insurance Risk Services programs come in.
We’ve developed exclusive programs and services to help you enhance workplace and employee safety — a must in any business. Our Risk Services Specialists are available to help you create, implement, and maintain a company safety program and provide you and your employees with valuable safety advice.
When you need help quickly, our Risk Management Assist* service grants you access to our Risk Services Specialists, who can answer a variety of questions on topics including property, auto, and liability loss prevention.
Other types of coverage to consider
Commercial general liability insurance:
Commercial general liability (CGL) insurance can help if you’re found legally liable for bodily injuries or property damage to a third party, such as slip-and-falls. It can also offer protection in situations where you or your employees are conducting business offsite.
Commercial property insurance:
Commercial property insurance can help protect your physical assets, like your storefront and your warehouse. It’s also designed to help with the repair or replacement costs for tools, equipment, inventory, electronics, and other assets that are crucial to running your business.
Business interruption insurance:
Business interruption insurance is designed to help you recover lost business income and cover ongoing business expenses if your business is temporarily closed for repairs due to a covered loss. It also includes coverage for extra expenses to expedite your return to business.
Pollution liability insurance
Pollution liability coverage can help protect your business from environmental exposures. Businesses that store fuel on their premises can call on this coverage if fuel were to leak from their tanks, causing third-party environmental damage or damage to their own property.
