What Does Errors & Omissions Insurance Actually Cover?

Errors and omissions (E&O) insurance responds to a claim alleging that your professional services or advice caused a client financial harm through an actual or alleged error, omission, or negligent act. It covers the cost of defending the claim and, where you're found liable, the cost of resolving it, up to the policy limit.

Typical covered scenarios include a missed deadline that causes a client financial loss, an error in advice or a deliverable, and a failure to perform a promised service. The common thread is financial harm caused by how a service was performed, not by a physical event.

Typical exclusions include intentional wrongdoing or fraud, bodily injury or property damage, which falls under general liability instead, and criminal acts. E&O policies also often don't cover contractual liability beyond what you'd owe under general legal principles, which matters because a client contract can try to impose broader liability than your policy will actually respond to, worth checking before you sign.

The same core coverage goes by different names depending on the profession, professional liability, malpractice insurance for medical and legal fields, or Tech E&O specifically for technology companies, but the underlying concept, financial harm from a professional error, is the same across all of them.

One structural detail matters more than people expect: E&O policies are typically written on a "claims-made" basis, meaning the policy in force when a claim is filed is the one that responds, not necessarily the one in force when the underlying error happened. That's why continuous coverage without a gap matters, and why some professionals need "tail" coverage when they close a policy or switch carriers.

Frequently Asked Questions