What's Typically Covered By E&O Insurance?

| August 22, 2016

As a business that provides professional services, you've probably already heard about the importance of errors & omissions insurance (often called E&O insurance). Wondering what it covers?

In a nutshell, E&O insurance protects your business in the case that it should fail to properly perform professional duties, which can lead to claims of errors or negligence.

Here are some specific aspects of E&O insurance coverage.

  1. Negligence: E&O insurance covers you if one of your customers or clients files a lawsuit claiming that your business failed in its "duty of care." This could happen if you made mistakes or gave poor advice.
  2. Legal costs: E&O insurance can pay for your legal fees when faced with a lawsuit that arises from an alleged error and/or omission, whether the claim is frivolous or grounded.
  3. Alleged negligence on the part of your staff: If you run a successful business, then it's likely you don't work alone. You may have full-time employees or contractors who work with you. Typically, E&O insurance covers lawsuits filed because of an alleged act of negligence on the part of your team members as well.
  4. Monetary damages: Obviously, you hope that it never gets to this point. However, if you are accused of negligence and the plaintiff wins the case against you, then you'll likely be required to pay damages. An E&O insurance policy helps cover those damages. There is a cap on the maximum amount of damages that the insurance will cover, but it's not uncommon to see policies that cover as much as $250,000 (or much more) in damages, including punitive damages.
  5. Copyright infringement: It may be the case that, in the course of providing your professional services, you inadvertently use intellectual property that belongs to someone else. E&O insurance typically covers damages that result from that as well.

Get the coverage you need. Call Pfenninger, Claxton, & Estelle Insurance Group at (800) 343-7239 for more information on Indiana E&O insurance.

NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.