Errors and Omissions Insurance (2024)

You can help keep your errors and omissions insurance cost down by:

• Training your employees
• Checking your contracting system for quality control
• Communicating with customers regularly about issues to make sure they’re satisfied

Errors and omissions insurance doesn’t help cover claims from events that happened before your policy’s retroactive date. It also doesn’t help your business with claims filed after your policy’s extended reporting period.

Be aware that errors and omissions doesn’t cover every type of liability claim. This insurance won’t help your business with claims of:

• Illegal acts and purposeful wrongdoing, such as intentionally breaking the law or deceiving your customers or clients.
• Bodily injury or property damage that your business causes. For these kinds of claims, you’ll need a general liability insurance policy.
• Employee injuries or illnesses caused by their work. A workers’ compensation insurance policy can give your employees benefits to help them recover from a work-related injury or illness. Be aware that many states require this coverage if you have employees.
• Discrimination or harassment in the workplace that your employees file. Getting employment practices liability insurance can help cover these types of claims.

Errors and omissions insurance only helps cover claims if:

• It’s filed within your policy period or the extended reporting period.
• The incident occurred on or after your retroactive date.

The retroactive date means incidents that happen on or after a certain date in your policy are eligible for coverage. The extended reporting period helps cover claims filed within a certain period of time after your policy expires. The retroactive date is important because some events that result in a loss for a client might not be apparent until a few years later when the court summons arrives in the mail. By having an older retroactive date, you will have more protection from events that happened in the past that have not surfaced yet.

Some common examples of how errors and omissions insurance can help your business include:

• Your accounting firm provides inaccurate financial advice to your client. As a result, they lose thousands of dollars and file a claim against your business.
• Your real estate agency forgot to include important details about a home. The buyer you’re working with files a claim against your agency claiming that you were negligent in the services you provided.
• Your public relations firm created a communication strategy for another business to improve its reputation. Instead, it causes a negative reaction locally and the client sues your business after seeing a decrease in sales.