Errors and omissions insurance (E&O) is 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.
It helps protect professional advice, service providing individuals and companies from bearing the full cost of defending against claims made by a client for inadequate work and damages awarded in such a civil lawsuit. The coverage focuses on alleged failure to perform on the part of, financial loss caused by, and error or omission in the service or product sold by the policyholder. It is often required by regulatory bodies such as FINRA or company investors.
Who needs E&O Insurance?
If you are in the business of providing a service to the client for a fee then you need this insurance. It can also include other industry but it completely depends on your insurance provider offering the solution. This policy covers the business owner, employees (salaried and hourly employees), and subcontractors.
What type to buy?
You may have a question about what type of E&O insurance to buy. Well, this varies from company to company because the every business has different risks and exposure. So the best way is to consult an insurance agent or agency.