Reviewing Your E&O Coverage Needs

Do you Review your E&O Insurance Policy before you Renew?

Errors and Omissions insurance is also known as Professional Liability insurance. It protects you against lawsuits that challenge the quality or professional delivery of your work. E & O insurance policies are often issued in increments of one million, and they give businesses just the safety net they need to thrive.

Do your Need Errors and Omissions Insurance?

Most companies rely on General Liability Insurance to safeguard themselves from business liability risks. While this particular type of insurance covers your organization for losses stemming from property damage, medical expenses, and bodily injury to a third party, it doesn’t cover claims associated with negligence, under delivery, mismanagement, documentation errors, and mistakes. Sometimes, clients may even file a lawsuit against you if they’re not satisfied with the outcome of your work or if the entire project fails. This doesn’t in any way mean you’ve underperformed. It only means that their perception of your work matters, and if your clients feel you were professionally negligent, they’ll likely turn to the courts to recover their financial losses. Errors and Omissions insurance covers the cost of these claims, even if they’re meritless.

What Does E & O Insurance Cover?

E & O insurance typically covers the cost of hiring an attorney, settlement or judgment expenses, bond premiums, and miscellaneous court costs, up to the limit of the policy. The coverage ensures you don’t have to pay any out of pocket costs for the claims filed against you. While you ought to have E & O insurance to protect your business from huge financial losses, you also need to review your policy periodically to make sure you’re well protected throughout the life of your business. Find out whether your business has grown or operations have changed before you renew and ensure the policy covers you for any new risks that might arise.

How to Review your E & O Insurance Policy


Many business owners wrongly assume that all E & O policies are created alike and therefore settle for the cheapest policy. The truth is that you generally get what you pay for. The most affordable E & O policy may not offer you adequate coverage for your operations. Look at your current policy, find out if it’s specifically tailored to your company, determine the level of risk for your organization and get the added protection if you have to. A programmer designing software for educational institutions runs a different level of risk than a business designing software for airports. So be aware of the unique risks your business carries and review your policy before you renew to make sure you’re fully protected.

Claims-made Coverage

You have to ensure your E & O policy is active when an alleged incident occurs. The policy also has to remain active when a lawsuit is filed. So if you’re planning to switch to a new insurance provider, you might end up exposing your business to gaps in coverage. Review your current policy instead of switching or sign up for ‘tail coverage’ so you can make claims during times of transition.

Bear your Client’s Needs in Mind

Many client contracts may legally require you to carry E & O insurance. This coverage proves that you will be able to the cost of financial losses suffered by the client because of your mistakes. So if you’re working with new clients, you will have to adjust your level of coverage to suit their specific requirements. Double check the customer’s contract, think about the most dangerous threats and risks you might encounter, and make sure the policy covers you for those specific risks.

Remember when it comes to your business, you don’t ever want to be underinsured. Review your policy annually or when you work with a client that has their own E & O policy requirements. It the best way to shore up your defenses against unexpected lawsuits.

All information provided in this blog is for informational purposes only. The sources used are presumed accurate. CITA Insurance Services, Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use and will not assume responsibility for any misguided information. No guarantees are implied.