Clarke & Sampson Blog

Errors and Omissions Insurance Basics

Scott Jefferson | Wednesday, October 11, 2017

Lawsuits, once a measure of last resort, are now commonplace in settling disputes. The good news is that you can protect your business by investing in professional liability coverage, also known as errors and omissions (E&O) insurance.

Professional liability (E&O) insurance is designed to protect organizations that provide professional services, such as consultants and accountants . The coverage protects against liability incurred as a result of an error or omission, whether real or alleged, that may arise in the course of providing a professional service.  

Who Needs E&O Coverage?

It is appropriate coverage for anyone who gives advice, makes educated recommendations, designs solutions or represents the needs of others. Service professionals such as accountants, computer consultants, software developers, planners, architects, real estate agents, contractors, and other types of common professional service businesses located in Alexandria, Virginia, are all prime candidates for carrying E&O insurance.

E&O Policy Overview

E&O coverage kicks in when your commercial general liability policy does not provide coverage, such as for service errors, contract performance disputes or any other professional liability issues. These policies also include defense costs, which can be quite substantial even if liability is not found. Policies typically do not provide coverage for non-financial losses or for intentional or dishonest acts. 

E&O policies generally have both a claim limit and an annual limit. The claim limit is the maximum amount paid for any single event, and the annual limit is the maximum paid in any one year. Limit options for small business often range from $1 million to $5 million each occurrence.

There are many different forms of professional liability insurance and multiple factors to consider when purchasing E&O coverage for your business. Because there isn’t a standard policy, an experienced agent who understands your needs is invaluable.


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