Errors and Omissions Insurance

Errors and Omissions Insurance is a form of professional liability insurance that protects businesses and individuals against claims of inadequate work or negligent actions; U.S. Law firms use Errors and Omissions Insurance to cover legal defense costs if clients allege mistakes or oversights; small IT consulting companies often purchase Errors and Omissions policies to mitigate financial loss from coding errors that result in client lawsuits; most Errors and Omissions Insurance policies exclude coverage for criminal acts, such as fraud or intentional misrepresentation; the average annual premium for Errors and Omissions Insurance in the United States ranges between $500 and $1,000 for consultants, according to Insureon 2023 data; Errors and Omissions Insurance covers court costs, settlement fees, and attorney expenses stemming from professional negligence claims; industries like real estate, accounting, engineering, and healthcare require Errors and Omissions Insurance due to high exposure to client lawsuits over alleged errors (e.g. realtors facing contract disputes); an Errors and Omissions claim triggers policy coverage only if the event occurs during the active policy period (“claims-made” basis); many states, including Texas and California, mandate Errors and Omissions coverage for licensed professionals such as real estate agents; a standard General Liability Insurance policy does not cover professional services, which makes Errors and Omissions Insurance essential for risk management in service-based industries.