Errors and omissions (E&O) insurance

Errors and omissions (E&O) insurance, which may exclude negligent acts other than errors and omissions ("mistakes"), is most often used by consultants and brokers and agents of various sorts, including notaries public, real estate brokers, insurance agents themselves, appraisers, management consultants and information technology service providers (there are specific E&O policies for software developers, website developers, etc.), architects and engineers, attorneys, third-party business administrators, quality control specialists, nondestructive testing analysts, and many others. A mistake which causes financial harm to another can occur in almost any transaction in many professions.

A professional liability insurance that protects companies and individuals against claims made by clients for inadequate work or negligent actions. Errors and omissions insurance often covers both court costs and any settlements up to the amount specified on the insurance contract.

Errors and omissions (E&O) insurance can be obtained by insurance brokers/dealers, registered investment advisors and financial planners, among others. Errors and omissions (E&O) insurance is often required by regulatory bodies such as FINRA or company investors.

In general, Errors and Omissions insurance helps pay for defense costs and damage awards that may be associated with professional liability claims. Defense costs, for example, can run into the thousands of dollars, even if you are eventually vindicated, so it's an important coverage to have.

A Professional liability claim must allege negligence in either the performance of or failure to perform Professional Services. These policies, much like Directors and Officers Liability Insurance, have a specific limit of liability and usually include both legal costs and damage awards in a single limit. Errors and Omissions insurance does not cover intentional, fraudulent or illegal activities or in most policies, punitive damages.