Errors & Omissions Insurance (E&O) helps cover the costs of claims against your business that mistakes or omissions were made in providing its services. This coverage is also known as Professional Liability Insurance. Typically, these claims are made by customers or clients of your business who claim they suffered damages because of mistakes your business committed while providing professional services.
Businesses that offer services and consulting typically need Errors and Omissions coverage. Anytime a business offers guidance or advice, there’s the possibility that a client may come back and make a claim against the business. For example, a brokerage firm may give a business advice on how to invest its employees’ 401(k). The financial advice doesn’t turn out as planned and the client business loses money. The client makes a claim against the brokerage firm for losses. Errors and Omissions Insurance can help cover the costs of this claim.