Insurance glossary · How policies work
errors and omissions.
Also called E&O, Professional liability.
Errors and omissions insurance covers claims that your advice, design or professional service caused someone a financial loss, which a general liability policy usually leaves out.
What kinds of claims does errors and omissions insurance cover?
Claims that your professional advice, design or service caused a client a financial loss: a mistake, an oversight, a missed deadline or work that didn’t do what you promised. It typically pays defense costs and settlements or judgments, up to the limit.
How is errors and omissions different from general liability?
General liability covers bodily injury and property damage. Errors and omissions covers financial loss from your professional work, which general liability usually excludes. A design error that causes no physical damage but costs the client money is an errors and omissions claim.
Do contractors need errors and omissions coverage?
It depends on the work. Pure installers usually rely on general liability. Contractors who design, engineer, do design-build or give professional advice, like system specifications or code consulting, can face claims general liability won’t answer.
Is errors and omissions the same as professional liability?
Mostly yes. “Professional liability” is the broader term; “errors and omissions” is common for consultants, technology and many service businesses. Medical and legal malpractice are forms of the same idea.
Why is errors and omissions usually claims-made?
Because professional mistakes often surface long after the work, and claims-made policies match coverage to when the claim is made. That makes the retroactive date and tail coverage important when you switch insurers or close.
Do defense costs reduce the limit?
Often yes. Many errors and omissions policies include defense inside the limit, so legal fees use up the money available for settlements. Some offer defense outside the limit for added premium.
Can a contract require errors and omissions coverage?
Yes. Design-build contracts, technology and consulting agreements, and some owner contracts set minimum professional liability limits, sometimes for years after the work ends.
Does errors and omissions work differently by state?
Coverage terms come mostly from the insurer’s form, but state rules on claims-made policies, like required tail offers in New York and North Carolina, apply to errors and omissions too. The occurrence vs claims-made page covers those.
by trade.
- General contractorsDesign-build and construction management work can bring professional claims your general liability excludes.
- ElectricalElectrical design, load calculations and system specifications can bring professional claims.
- HVACSystem design and energy-efficiency recommendations can be professional services under a policy’s definitions.
where you’ll see it.
- Contracts“Professional liability insurance with limits of not less than … per claim, maintained for … years after completion.”
- General liability exclusionsA professional services exclusion on your general liability policy.
- Policy declarations“Claims-made,” a retroactive date and whether defense is inside the limit.
know where your professional work is covered.
Riza reads your general liability’s professional services exclusion against the work you actually do, places errors and omissions where it’s needed, and keeps the retroactive date intact when you switch.
Get a quoterelated terms.
Coverage it touches: Professional liability