Errors and omissions insurance, also called E&O insurance, is a type of professional liability insurance that protects businesses against claims of mistakes, negligence, inadequate work, inaccuracies, misrepresentation or similar allegations. Your business may need E&O insurance if it provides services to customers for a fee.

Professional liability insurance, or PLI, is a specialty coverage that you can’t get under homeowners insurance endorsements, in-home business policies or business owner policies.

There are different types of E&O protections available for small businesses, such as:

  • Copyright infringement. Covers damages and expenses a business might have to pay if it infringes on someone else’s copyright.

  • Defense costs. Covers attorney fees or other costs a business must pay to deal with a covered claim, even if it hasn’t done anything wrong.

  • Negligence. Protects a business against actual or alleged errors or omissions in its services.

Some E&O policies will even cover work done outside of the country.

See how to protect your business quickly:

What does errors and omissions insurance cover?

In general, E&O insurance may cover or reimburse you for some or all of the following:

  • Errors or oversights in your work.

  • Failure to deliver a service or missed deadlines.

  • Professional negligence or failure to meet a standard of care.

  • Breach of contract.

  • Claims filed when your policy is active for events that occurred after a date defined in your policy.

  • Legal and court costs typically related to the items above.

  • Settlements or judgments typically related to the items above.

E&O insurance may not cover:

  • Events that happened before the policy took effect.

  • Illegal acts.

  • Purposeful wrongdoing.

  • Bodily injury your business causes (general liability policies typically cover that).

  • Property damage your business causes.

  • Data leaks.

  • Employee injuries or illnesses (workers’ compensation policies typically cover that).

  • Discrimination or harassment claims from employees (employment liability policies typically cover that).

How much does errors and omissions insurance cost?

The cost of E&O insurance varies. For example, insurance provider The Hartford estimates that business owners spend an average of $500 to $1,000 per employee per year on E&O coverage.

How much this insurance will cost you depends on several things, including:

  • Whether you’re in a high-risk industry.

  • How much coverage you want.

  • Whether there’s a history of liability claims against your business.

  • Where you do business.

  • Number of employees.

Frequently asked questions

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