Legal Guide

Who Needs Errors and Omissions Insurance?

Customer dissatisfaction is something no business wants, but now and then, a service experience or product doesn't meet expectations. When this happens, a complaint is usually made, and a company will take steps to handle the situation and satisfy the complaining party. 

However, when dissatisfaction is high, a customer could file a suit alleging they suffered financial damages. The fallout from these events can be financially devastating for businesses. Because mistakes can lead to serious legal consequences, you should invest in E&O insurance to protect your organization's interests. 

What Is E&O Insurance?

Also known as errors and omissions insurance, this liability coverage protects professionals if they make a mistake that causes a customer financial harm. General liability doesn't provide this benefit, so you may want to invest in this policy type for your business if you provide specialized services. In addition to covering any damages you may be liable for, this coverage will also pay for your legal costs. 

Why E&O Insurance is Vital to Your Business

The primary benefit to any business with an errors & omissions insurance policy is its protection against financial loss and reputational harm. Anytime a customer claims that your professional services were either inaccurate, incomplete, or were negligent, the potential for a complaint turning into a lawsuit is high. 

Not sure you need E&O coverage? Below are some of the most common career fields that benefit from this type of policy: 

Home inspectors


Interior decorators

Software developers

Insurance agents

Architects and engineers

Medical professionals

Real estate agents and brokers



Travel agents



IT consultants

Graphic designers

Nonprofit organizations

Barbers and beauticians

Funeral directors

Business consultants


Personal trainers


Dog groomers

Printing companies

Benefits of Errors & Omissions Insurance

Although not all companies must carry this coverage, even as part of a larger business insurance policy, having E&O coverage in place is  a smart decision for many reasons, including: 

Payment of Damage Claims

Without adequate protection, your business is liable for the costs associated with customer complaints and lawsuits alleging you or an employee made an error or omission that caused them financial loss. In addition, situations where expected earnings aren't realized or accusations of unfair business dealings can mean harsh penalties, including expensive court fines for your bottom line. 

The reputational damage your company could face from these incidents is harmful to your success and profitability. E&O insurance addresses these issues, so you don't have to.  

Personal Injury Claims

When you hear the phrase "personal injury claim," you probably imagine someone suing a negligent driver or a business owner after someone gets injured in their store. When it comes to professional situations, E&O coverage includes damages involving libel, slander, and other conditions that financially hurt another party by hurting their reputation and/or character in the public eye. 

Keep in mind that even if a slander claim gets proven false, the damage to your brand's good name may still be left in ruins. This is why you need an effective risk management strategy that incorporates an E&O policy to defend against these allegations and maintain your standing with your clients.

Defense Against Negligence

Negligence is a serious claim to be made against any business. If one of your employees fails to show due care when providing professional services, and this failure causes damages to a client, your company is liable for that loss.

E&O insurance pays for your defense costs against these claims and will pay for settlements related to the case. This is especially important so that you aren't paying these costs out of your own capital. 

Copyright Infringement

With the advent of technology and online searches, copyright infringement claims have grown significantly. Often, companies use another person's intellectual property without ensuring it was in the public domain or had permission to use it. This can lead to a costly lawsuit demanding you pay for the loss of profit the owner should be entitled to from your benefit. Errors and omissions insurance for businesses will protect your company against this serious mistake.  

Never Worry About Defense Costs

One of the most significant costs involved with customer and/or client claims or lawsuits is the legal defense fees. With this type of business insurance, these costs get paid for by your policy, regardless if you are at fault or not. This is important because, without coverage, it's not uncommon for businesses to settle early in hopes of saving face, even if they aren't at fault. Why do they do this? Because the cost of defense is too much. 

Don't let frivolous claims or suits alleging professional mistakes ruin your future success. Investing in adequate coverage provides a much-needed extra layer of risk management for your company.

E and O Insurance Delivers Financial Protection and Peace of Mind

At the end of the day, as a professional using your expert training and knowledge to provide services to clients, you face significant risks. For example, a single mistake that a client believes caused them financial harm could lead to a drawn-out and expensive legal battle that you can't afford. 

The good news is that an E&O insurance policy is designed to handle these types of claims and lawsuits, helping your venture thrive. So don't wait until you need this coverage to buy it. Instead, speak with a reputable business insurer right away and create a customized policy you can count on for protection. 

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