If you are a professional, there’s a good chance that you have at least heard of Errors and Omissions insurance. In summary, it’s designed to protect your backside if someone decides to file suit against you. In this short article we will answer the question: what is E&O insurance? We will also share a few companies that you may want to reach out to, and maybe give a hint of how much it may cost you.
The term “E&O” is just an abbreviation of “errors & omissions”. It’s just a lot simpler to say “E&O”.
E&O insurance helps to protect professionals from liabilities that may arise form any errors or omissions that they may make during the course of their work. It’s easier to think of it as professional negligence insurance to me. If you make an error, or forget some crucial detail (omission), this form of insurance may help to pay any claims that are made against you. It can also help to pay the cost of defending a civil claim in court.
To explain what Errors & Omissions insurance is, I like to use an example. Let’s say that Bob the engineer is hired to build a boat ramp. Bob draws up the plans from the instructions that AB Marina have given him. Sadly, Bob’s plans contain a defect because he forgot to state that three columns were to be set in the ground. The contractor builds the ramp, based on Bob’s design. Joe’s boat then uses the ramp, but it collapses due to only two columns being used instead of three.Joe’s boat gets crushed.
Joe is going to file suit because his boat got crushed. Bob is going to pay out the nose because of his professional negligence. What can Bob do?
If Bob has E&O insurance, he can file a claim. Depending on his policy, the insurance will hire an attorney to represent Bob. The E&O insurance company will cover the costs of defending Bob in court, any damages, and any settlements that they reach with Joe. Of course, the most the insurance will pay is the maximum policy limit. Hopefully Bob has enough to cover Joe’s boat.
Some of the most popular professional E&O insurance companies are Nationwide, Hiscox, and NAPA. Of course there are many more. A simple Google search will bring you a whole list.
As far as getting a quote for E&O insurance to figure out the cost, you are just going to have to contact the insurance companies themselves. There are so many different types of this insurance, and they vary in coverage immensely. For example, an attorney’s Errors and Omissions insurance policy is going to cost a lot more than a notary’s.