What Is Errors and Omissions Insurance?

Errors and omissions (E&O) insurance is a line of professional liability coverage that protects the management of a corporation from claims due to insufficient work, or negligence. E&O insurance is based on the idea that all good business people occasionally "miss" something. As long as that business person does the best they can to avoid missing things too often, the business will be covered under an E&O policy.

E&O Example

E&O claims often arise out of contracts. There is always legal verbiage that must be added to a contract in order to make it enforceable and lawful. From time-to-time, it is possible for a business owner to omit this language. This is an oversight and not intentional, but the client who suffers loss because of the contractual omission may sue the business owner. If the business owner is covered through E&O insurance, the insurance company will cover the loss. Very often the loss that is covered is a partial coverage.

E&O Training

When a business owner has a number of E&O claims, the insurance company may drop the policy. For this reason, businesses often focus on the minute details that will protect them from E&O claims. An insurance company may even offer to train the business owner and staff on legal technicalities that may result in an E&O claim.

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