E&O insurance and professional liability insurance are two names for the same type of insurance. E&O insurance is generally used more loosely for professional and semi-professional occupations. Overall, however, these names refer to the same coverage.

What is E&O Insurance?

E&O insurance is a type of business insurance geared to cover claims concerning acts of professional negligence. In other words, professionals that offer specialized services or expertise face a lot of risk. If their services results in monetary injury of a client, that client can sue for the damages. E&O insurance steps in to help pay for legal fees regarding such claims.

There are many types of professions that may utilize this coverage. Although they may call it different names, professions that frequently use E&O insurance include:

• Accountants
• Lawyers
• Medical professionals
• Contractors
• Fitness and beauty professionals

This is not a comprehensive list. Essentially, if you are in a profession where your expertise can lead to professional negligence, you need E&O insurance.

Other Names for E&O Insurance

Originally, there was a small difference between E&O insurance and professional liability insurance in the professions they protected. Now, however, the names are synonymous.

In the medical world, this liability insurance is known as medical malpractice insurance. This is because the type of professional negligence a medical professional may commit are of a different nature and degree of, say, an accountant. An accountant’s mistake can cause a client to lose a substantial amount of money. A mistake by a medical professional can not only cost thousands (or millions) in medical bills, but in emotional and physical distress, as well. Medical malpractice insurance is crucial for hospitals and specialists. Specialists such as surgeons and OBGYNs face the highest number of professional negligence claims per year and so often carry personal medical malpractice policies for extra coverage.

Errors and omissions insurance can help with legal fees if a victim of professional negligence decides to sue so the company doesn’t go into debt defending against the claim.

Who Pays for Professional Liability Insurance?

If you work for an employer, such as if you are a nurse at a hospital, you may be covered under your employer’s professional liability insurance policy. However, many professionals choose to carry their own professional liability insurance policy to guarantee that they have coverage. While an employer’s policy may offer some compensation, that compensation could be limited.

Professionals in particularly high-risk professions, such as surgeons, tend to carry their own policy. This ensures they are covered, especially if they decide to switch employers. Some policies will only cover you as long as you work for the employer, so having your own policy can help cover the gaps.

How Much is Errors and Omissions Insurance?

The cost of professional liability insurance varies widely depending on several different factors such as your business’:

·        Location

·        Industry

·        Size

·        Coverage limits

·        Claims history

Industry is perhaps the most important factor playing into the cost of your professional liability insurance policy. The higher risk your industry presents for professional liability claims, the more you will typically pay for this insurance. It also varies depending on your business’ own claims. If your specific company has a recent history of relevant claims, you may pay more for errors and omissions insurance. This is why, as with other insurance policies, your rates will generally go up directly after a claim.

How Much Errors and Omissions Insurance Do I Need?

Your errors and omissions insurance needs will depend on your business’ unique aspects and industry. Who needs to be insured? How many employees or professionals are you insuring? How much is the average claim in your industry?

All of these are considerations that you should take into account. An insurance professional can help you evaluate your business’ risk and find you an errors and omissions insurance policy designed specifically for you and your company.

Be sure to shop around and compare quotes with multiple insurers. Not all errors and omission insurance policies are created equal, so it is important to find the right policy for your business and any professionals working for you.

Keep in mind that errors and omissions insurance doesn’t cover everything. You may need other liability policies such as general liability, liquor liability and umbrella liability insurance. You can often bundle these coverages into a business owners policy for your small business if you operate in a low risk industry.