Do I Need Errors and Omission Insurance?

When determining what types of insurance a business needs, owners may neglect to consider Errors and Omissions (E&O) insurance, also known as professional liability insurance. If your business involves offering advice or providing a service, you'll likely need an E&O policy.

Some common occupations that require E&O coverage are architects, advertising, attorneys, consultants, doctors, engineers, financial advisors, marketers, printers, insurance and real estate agents, and graphic/website developers.

An E&O policy provides coverage for claims that a general liability insurance policy does not.

What are some examples of an error or omission?

  • Errors in service
  • Inaccurate advice
  • Misrepresentation
  • Negligence

What losses may be reimbursed by E&O insurance?

  • Administrative costs
  • Attorney's fees
  • Court costs
  • Settlements and judgments

What factors could affect your E&O insurance policy premium?

  • Annual revenue of your business
  • Coverage limits you choose
  • Location of your business
  • Number of employees
  • Risks associated with your industry or business

What is not covered by an E&O policy?

  • Bodily injury/property damage
  • Employment practices
  • Patents and trade secrets
  • Breach of your customers' personally identifiable information
  • Work-related illnesses and injuries

What if I don't have E&O insurance and have a claim filed against me?

If someone files an E&O claim against your business, you could be liable for the related attorney's fees, court costs, settlement, and/or judgments. Even if you are successful in your defense, you still will be obligated to pay any legal fees you incur.

Be sure to contact a licensed business insurance broker or agent who can provide more detailed information, help solicit quotes from insurers, and answer any questions you have.

An independent agent can help business owners understand which products can best meet their needs.

The information and descriptions on this site are general in nature. The coverage afforded for a particular loss depends on the specific facts and the terms, exclusions, and limits of the actual policy. Nothing on this site alters the terms or conditions of any policy, as the policy controls coverage. Coverage options, limits, discounts, deductibles, and other features are subject to underwriting criteria, state availability, and effective dates. Coverage provided and underwritten by NJM Insurance Company and its subsidiaries, 301 Sullivan Way, W. Trenton, NJ 08628.

The information contained in this article should not be construed as professional advice, and is not intended to replace official sources. Other resources linked from these pages are maintained by independent providers; therefore, NJM cannot guarantee their accuracy.