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Mistakes can happen, even to the best of us. That’s why Simply Business keeps you protected with errors and omissions insurance customized to your exact needs.
Whether you’re a beautician or musician, an accountant or an acupuncturist, our E&O insurance can cover the biggest risks you face while doing your work. With our no-hassle quote form, we can connect you with affordable policies from the insurers who know your business best.
Just answer a few questions to get an errors and omissions insurance quote in less than 10 minutes.
E&O insurance — also known as errors and omissions insurance — covers the costs of legal claims or alleged damage caused to a customer by errors or unintentional omissions from your work (hence, the “errors and omissions” title).
This term is often used interchangeably with professional liability insurance, and for the most part, they’re identical. The small difference between them is that professional liability insurance is generally considered to be more of an umbrella product that covers a wider range of needs, and errors and omissions insurance is part of that umbrella coverage.
This definition is fairly comprehensive, so let’s take a look at E&O insurance in action.
Let’s say you’re a makeup artist and you’re doing a bride’s makeup on her wedding day. During a previous makeup trial, she told you that she’s allergic to a certain type of makeup, but it slipped your mind. When you use that makeup on her, she breaks out with a terrible rash, causing her to look less than perfect on her wedding day.
She sues you for negligence, but rather than paying out of pocket for these bills, your E&O insurance policy covers your legal costs and the damages you’re ordered to pay.
Here’s another example: You run a small tax preparation business with two part-time employees. During the busy tax season, one of your employees makes a minor error on a customer’s tax return because he’s overtired. While you can understand the reason why the mistake happened, it’s no solace when the customer gets audited and decides to sue your company in response.
Fortunately, your E&O insurance policy covers monetary damages from the fallout, meaning your bottom line isn’t affected.
Now imagine these scenarios without errors and omissions coverage. Chances are you’d have to pay those legal fees and payouts yourself. Unless you have an extra \$54,000 tucked away somewhere (the starting cost of a small business lawsuit), those damages could be devastating to your business.
For a quick summary, E&O insurance usually covers:
E&O insurance does not cover:
One of the biggest benefits of errors and omissions insurance is that it provides you with a foundation of protection in the event you accidentally make mistakes during the course of your work.
But what if you’re an all-star who is extra careful about avoiding mistakes?
The thing is, even if you don’t make mistakes, you could still be accused of making mistakes by your clients.
That’s why every business owner who provides services to clients or customers should have an E&O policy. It can cover you if you make mistakes, but it can also provide significant peace of mind with regard to being sued by others.
And with your estimated chances of getting sued any given year at a whopping 45%, you can’t afford to not have this essential coverage.
Let’s take a look at the different business types that should have an E&O insurance policy:
Keep in mind that this list isn’t by any means exhaustive, so if you don’t see your business type here, you should still use our quote form to determine if your business needs errors and omissions insurance.
At its very essence, E&O insurance covers mistakes and omissions that you may have unintentionally made while doing your work. For example, if you’re a hairstylist and your client accuses you of damaging her hair with the wrong type of dye, your E&O insurance can pay out claims associated with that mistake.
You don’t even have to make a mistake for E&O insurance to come in handy. If a customer sues you for making a critical error — even if they’re wrong — you’d still have to spend money on a lawyer to defend your business. Errors and omission insurance can pay for those legal fees, up to your policy limit.
It’s worth noting that errors and omissions insurance doesn’t cover your business if you or any of your employees made the mistake intentionally or purposefully omitted information. It’s another good reason why you should make sure you can trust the people you hire!
Let’s take another look at how errors and omissions insurance works.
You’re a photographer who specializes in wedding photography. You’ve been doing this gig for a while, but you know that mistakes can happen, especially when working with other photographers. That’s why your photography business has a comprehensive E&O insurance policy.
You get hired for a big wedding, so you bring on a second photographer to help you capture those magical moments. The event goes off without a hitch, so you’re excited to get the pictures prepared for the happy couple.
Unfortunately, a few days later, your second photographer informs you that they accidentally deleted all of the photos they had taken that day.
The couple is furious and insists on getting a full refund from you, plus punitive damages. They take you to court, where — after a lengthy court battle — you’re finally ordered to give the couple a partial refund.
Thanks to your E&O insurance, the costs associated with your lawyer and paying damages to your customers won’t affect your photography business negatively. Plus, you won’t have to use any of your personal money to pay for damages, as your policy covered everything.
Now imagine that scenario without E&O insurance.
You’d have to pay for the lawyer from the business’s bank account — or your own. And once the case is settled, you’d have to pay for damages to the couple, on top of those expensive legal fees.
Ultimately, E&O insurance makes it easier for your business to survive in a world where clients and vendors can sue you for a number of reasons. Rather than getting discouraged, you can get an errors and omissions insurance policy so you can stay focused on what really matters…
Running your business.
While Errors and Omissions insurance isn’t required by federal law, it’s worth noting that your profession may require you to take out a policy to get licensed or registered.
There are other reasons why you may be required to take out an E&O insurance policy, including:
Whether you’re a personal trainer, lawyer, or insurance agent, you probably know that providing services to clients carries a certain amount of risk.
E&O insurance can protect you from two of the biggest risks you’ll face while doing your work: You or your employees making mistakes or having an angry customer claim you’ve made a mistake.
Everyone makes mistakes. Sometimes they’re small and unnoticeable, but there are other times where they can have a significant impact on your clients. If that happens, your policy can make things right again by recouping the client’s financial losses, plus paying for any resulting legal fees.
And even if it’s your employee who made the unintentional error, your policy can still cover you.
But what if you didn’t make a mistake?
Errors and Omissions insurance can come in handy there, too, as it can pay for legal bills if you need to hire a lawyer to defend you against a baseless claim. Otherwise, even if you didn’t do anything wrong, you’d still have to pay out-of-pocket for your attorney’s fees.
Errors and Omissions insurance costs vary based on the type of business you have, the number of full-time or part-time employees who are on your team, and the services you provide to clients.
The best way to see how much your E&O policy may cost is to compare quotes from top insurers. This allows you to get a better idea of what your premium prices may be, as well as how much coverage you can get.
Don’t fall into the trap of avoiding business insurance because it’s another expense. If you’re not covered and you get accused of making a mistake, the costs to defend yourself could quickly outstrip any amount of money you’d spend on an actual insurance policy.
Typically, your Errors and Omissions insurance premiums are income- tax-deductible. That’s because the IRS considers your insurance premiums as part of the cost of doing business, which is deductible.
We recommend getting advice from a tax preparer or an accountant if you’d like to learn more about deducting your insurance premiums from your business’s taxes.
*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated reinsurance carrier by A.M. Best. Harborway Insurance is a trade name of Simply Business, Inc., which is a licensed insurance producer in all 50 states and the District of Columbia.