What is Errors and Omissions insurance?
Errors and Omissions insurance (also called “E & O”) is one portion of a comprehensive professional liability insurance package. It protects business owners and professionals against liability claims or lawsuits for damage which is caused by errors (something they did) or omissions (something they failed to do). For example, if you are an accountant doing tax preparation work for a client and you mistakenly claim a deduction to which your client is not entitled, your client might sue you to recover the penalties imposed by the IRS (plus damages for the mental anguish caused by the audit). Errors and omissions insurance could protect you against such a lawsuit. Errors and Omissions policies can be quite expensive, and are typically customized to meet the needs of a specific professional group. Professionals who purchase Errors and Omissions policies commonly include lawyers, accountants, engineers, bankers, employee benefit managers, architects, stockbrokers, insurance agents, travel ag
Errors and Omissions insurance provides protection against professional liability by service contractors and may be required by clients in their requests for proposals. In this way, companies who hire outside consultants are protecting themselves against any claims from their clients or customers brought by errors and omissions of the contracted service provider.Such professional liability insurance benefits a business even if claims of liability never occur. There are as many compelling reasons for professional liability insurance as there are potential mistakes made: • Accidental upload of a computer virus costs a company $10 million to restore data and software. • A consultant is sued for damages from faulty advice in a seminar. • Confidential information disclosed to a third party causes inventory to depreciate in value. • Installation of a program opens the client to a copyright infringement action. • A person defamed by a remark logged into a company s web site sues the site s ho
