Errors and Omissions Insurance: Protecting Your Business Against Claims
Errors and omissions (E&O) insurance is a crucial protection for businesses that provide services to customers for a fee. This type of insurance safeguards against claims of mistakes, negligence, misrepresentation, and more. NerdWallet has reviewed 19 business insurance companies to identify the top providers of E&O insurance.
Why You Need E&O Insurance
If your business offers professional services, having E&O insurance is essential. It protects your finances if you’re accused of errors or oversights, failure to deliver a service, breach of contract, or professional negligence. E&O insurance can cover legal and court costs, settlements or judgments owed, and damages and expenses.
How E&O Insurance Works
E&O insurance is typically a claims-made policy, meaning coverage must be in place at the time a claim is made. If your coverage lapses, you’ll no longer be protected. It’s advisable to buy a policy as soon as you start serving clients. Retroactive coverage may be available for past work, but this usually requires purchasing the policy through an insurance agent.
Top E&O Insurance Providers
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Next Insurance: Best for getting a quote and buying an E&O policy online. NerdWallet rating: 4.5
- Quick online quotes and potential discounts for multiple policies
- Can’t buy retroactive coverage online
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The Hartford: Best for getting E&O coverage alongside a business owner’s policy. NerdWallet rating: 5.0
- Can purchase E&O and business owner’s policy simultaneously
- May require phone call to complete purchase
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Hiscox: Best for work done outside the U.S. NerdWallet rating: 4.0
- Covers work done worldwide, with claims filed in the U.S. or Canada
- Retroactive coverage available under certain conditions
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State Farm: Best for working with an insurance agent. NerdWallet rating: 3.5
- Local agents available to assist with quotes and purchases
- Higher-than-expected customer complaints
What E&O Insurance Doesn’t Cover
- Illegal acts
- Purposeful wrongdoing
- Bodily injury or property damage (covered by general liability insurance)
- Data leaks (covered by cyber liability insurance)
- Employee injuries or illnesses (covered by workers’ compensation insurance)
- Discrimination or harassment claims from employees (covered by employment practices liability insurance)
Who Needs E&O Insurance?
Businesses providing professional services for a fee, including:
- Accounting
- Architecture
- Financial and investment advising
- Insurance
- IT consulting
- Real estate
Some professionals are legally required to carry E&O insurance, and clients may also demand proof of coverage.
Cost of E&O Insurance
Premiums vary based on industry risk, coverage amount, business history, location, and number of employees. For businesses with less than $1 million in annual revenue, premiums can range from $800 to $5,000 per year, depending on the industry.
Frequently Asked Questions
- Who needs E&O insurance?: Businesses providing services for a fee.
- What if my E&O policy expires?: Claims may not be covered if the policy isn’t in effect.
- Is E&O insurance the same as professional liability insurance?: Often used interchangeably, but can vary by industry.
NerdWallet Small Business helps you get real-time quotes from 30+ insurers and instant access to your Certificate of Insurance (COI) through Coverdash. You can save up to 30% on business insurance by comparing quotes from multiple providers.
