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professional liability insurance

What Is Error and Omission Insurance?

Error and omission insurance, additionally known as E&O insurance, Malpractice Insurance, or professionalliability insurance, is liability insurance to protect professionals.

It helps protect you from clients who filed lawsuits claiming you were negligent and made a mistake in your professional services in service-based industries. This insurance can provide coverage for your court fees or agreements, which can be very expensive for your company to pay on its own.

Most regulated professionals require this type of insurance because Commercial General Liability insurance policies do not protect against claims arising from professional practices such as negligence, malpractice, or misrepresentation.

What Is Covered by E&O Insurance?

E&O insurance coverage helps protect your business from claims of:

  • Errors
  • Omissions
  • Negligence
  • Inaccurate advice
  • Misrepresentation
  • Violation of good faith and fair dealing
  • Personal injuries, like libel and slander

Which can range from a couple thousand up to millions of dollars.


Without E&O coverage, you are at risk of giving these types of expenses out of pocket. But you can rest easy remembering your policy covers most of these costs.



To help keep your E&O insurance cost down, you can always:

  • Train your employees
  • Communicate with your customers regularly about issues to make sure they're satisfied
  • Check your contracting system for quality control

The claims-made basis or occur basis

Claims-made policy. The insurance policy is only valid for claim when it is within the in-forced period. The coverage includes any error, omission, or negligent act done in the insured's professional business's conduct throughout the policy period.

On the other hand, insurance won't cover any occurrences before the policy begins except policies with retroactive dates.

Most of the error and omission insurance policies are on a claims-made basis. 

Example of Professional Liability Insurance

One common example of a type of professional liability insurance is medical malpractice insurance. Medical professionals and specialists do their work under the not negligible threat of facing claims for purported medical negligence or malpractice, which is characterized as an act or omission by a medical professional in which he or she provides a medical treatment that falls below the standard of care, resulting to injuries to or even demise of the patient. While most medical malpractice cases are handled as civil torts in the US, medical malpractice insurance may offset such claims' cost to providers. 

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