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Errors & Omissions Insurance

Errors and omissions insurance protects you and your company in the event you make an error (mistake) or fail to do something you should have (omission) while providing professional service—that could result in a lawsuit. Also called professional liability insurance or malpractice insurance, errors and omissions liability insurance is a highly recommended add-on for any professional services business that offers professional advice, services or consulting. While safeguarding you against claims of error, omission or claims of negligence while completing your professional duties, it can also protect your company against slander, libel and breach of contract. This section explains what our E&O insurance offers.
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Who Should Buy Errors & Omissions Insurance

What Is Errors and Omissions Insurance?

Essentially Errors and Omissions Liability Insurance coverage takes care of some of the things that your General Liability policy does not. This includes when you make a mistake resulting in a lawsuit from a third part and other professional liability issues. E&O Liability Insurance will cover your legal defense costs—which can be quite steep, even if you're not found liable for said mistake or negligence. It's important to note that an omissions insurance policy usually does not provide coverage for non-financial losses or for intentionally dishonest acts. 

Depending on the provider, omissions coverage generally includes both a claim limit and an annual aggregate limit. The Errors and Omissions Insurance claim limit is the maximum amount that will be paid out for any single event—such as a lawsuit—and the annual aggregate limit is the maximum amount that will be paid out over any one year. Usually, your industry and type of business will influence your E&O Liability Insurance limits. A qualified broker at Krywolt Insurance will be able to provide further information regarding your unique Errors and Omissions Insurance quote.

What an E&O Policy Entails 

You should always be prepared to protect yourself in the event a dissatisfied client sues your business over a mistake or negligent act. Even if you pride yourself on your business acumen, professionalism and expertise, E&O Insurance is like car insurance: even the best drivers should be protected in the event of a rare at-fault accident. So it follows with Professional Liability Insurance. As improbable as it might be, mistakes do happen. Give yourself peace of mind by having the right coverage—so you don't find your business crippled by unforeseen legal expenses due to an error on your part. 

E&O Insurance Protects Against:

  • Work mistakes and oversights 
  • Undelivered services
  • Accusations negligence 
  • Missed deadlines

Work Mistakes and Oversights

While mistakes happen, even the smallest professional error can wind up costing a client money. To recoup their losses, the client may sue your business over the mistake. Without E&O Insurance, you could end up with a hefty legal bill. 

Undelivered Services

Failing to deliver promised services can impede your client from doing business. To make up for the inconvenience, or loss of capital, the client might sue. 

Accusations Negligence 

Mistakes that happen as a result of negligence could also wind up with your business being taken to court. If you fail to meet the minimum standards in your industry while working with a client, the dissatisfied client could still sue you for negligence even if there wasn't anything wrong with your work. 

Errors and omissions insurance coverage is strongly recommended for protecting your business from claims alleging negligence from your professional services including failing in your “duty of care,” giving incorrect advice or making mistakes.

Missed Deadlines

If you miss a deadline, your clients business could be seriously impacted—possibly resulting in loss of revenue. This opens the door for the dissatisfied client to sue your business over late work. With Professional Liability Insurance, you'd be protected from the cost of the lawsuit. 

What is Covered by an E&O Insurance Policy? 

No matter how dedicated you are to your profession and clients, even one mistake can result in financially crippling legal fees. With an omissions policy, you can breathe easy knowing your insurance has your back in the rare event of an error. Although it may vary per insurance provider, typically the following are included in your policy:

  • Defense costs
  • Personal injury (e.g., libel or slander)
  • Copyright infringement
  • Worldwide Errors and Omissions Insurance coverage
  • Temporary staff and independent contractors
  • Claims arising from services provided in the past
  • Claims and damages

Defense Costs

Even if the lawsuit is groundless, your Errors and Omissions Liability Insurance will cover the costs associated with lawyers to defend you. Your Errors and Omissions Liability Insurance policy will even cover supplemental expenses you incur as a result of attending an arbitration proceedings trial in the defense of a covered claim.

Personal Injury

Errors and Omissions liability insurance protects you against personal injury claims (e.g., libel or slander) that arise while rendering your professional services. Note that this does not include bodily harm, as that should be covered by your General Liability Insurance policy.

Copyright Infringement

We customize your Errors and Omissions Insurance Coverage for the specific needs of your business. If you work in a creative industry, it can be all too easy to accidentally publish a photo or use a song that doesn't have the correct copyright. Even if this was unintentional, you would wind up in the legal hot seat. 

Worldwide E&O Insurance Coverage

At Krywolt Insurance, we believe your insurance should follow you wherever your business takes you. If you work as a consultant and travel regularly for work or have clients overseas, you need to be protected in the event an error happens while you're outside of Canada. This follows if you're based in Canada, but have clients from around the world. 

Temporary Staff and Independent Contractors

Your Krywolt broker can help find coverages for claims arising from business-related services completed by your employees, temporary staff and independent contractors. 

Claims and Damages

It’s better to be safe than sorry. If you lose a large claim, it can affect the financial stability of your business. Your Krywolt Broker will help you set up a policy that covers claims for monetary damages and non-monetary relief. That way, your business can continue as usual—rather than being forced to close your doors for good on account of losing a large claim. 

Not to worry. If a client sues you, your insurance company will immediately defend you and, if necessary, appoint a lawyer to handle your claim, covering any damages you may incur, up to the policy limit.

What is Not Covered by an E&O Policy? 

Errors and Omissions Insurance does not cover all possible causes of a lawsuit. While some of the following would be covered with General Liability Insurance and Workers’ Compensation, we still advise you to speak with a qualified Krywolt Insurance broker to ensure your company is adequately protected. 

An E&O Insurance Policy Does Not Protect Against:

  • Customer bodily injuries or property damage
  • Damage to business property
  • Employee injuries
  • Vehicles used by a business
  • Employee discrimination lawsuits

Who Needs Errors and Omissions Insurance?

All business owners who offer professional services need to have Professional Liability Insurance. Since that's a little broad, let's break it down further.

Errors & Omissions Insurance Coverage Options

Professional Errors and Omissions Insurance

Whether your professional services are in legal, finance, engineering, marketing, human resources or architecture, you need Professional Liability Insurance. Examples of how this coverage would protect you include:

  • Error in legal advice given to clients
  • Miscalculation of assets valuation
  • Design recommendations not fully compliant with building standards
  • Accidentally using an image or graphic that infringes on the artist's copyright 

Manufacturers E&O

This coverage protects your company from making a manufacturing mistake that results in a third-party financial loss—not including bodily injury or property damage. For example, E&O Insurance covers damages that result from:

  • Poorly made, incorrect or faulty products that you manufacture, sell, handle or distribute
  • Material defects due to errors and omissions, resulting in financial loss for a third-party
  • Failure to deliver promised services
  • Failure or negligence to meet deadlines 

Technology E&O

A type of insurance designed to cover providers of technology products or services, this policy protects the likes of data storage companies, website designers and software and computer manufacturers. Often confused with Cyber and Privacy Insurance, a key discerning factor is that Technology E&O is designed to protect the company, whereas Cyber and Privacy Insurance is designed to protect the consumer. 

E&O Insurance Real Estate

Protecting against mistakes and oversights, Errors and Omissions Insurance for real estate agents ensures you aren't sued in the event you make an error on a title or oversight in a property listing. Whether a dissatisfied client is suing with no grounds or you genuinely made a mistake, it's important to protect your business from the impact of expensive legal fees. 

Contractors E&O

If you make a mistake, causing a problem with a structure you've worked on, or you fail to meet a deadline, the fallout could be devastating for a contractor business. Unfortunately, consumers are quick to accuse contractors of negligence if they're unsatisfied with your work. It's becoming increasingly common for these accusations to escalate to legal disputes. If you find yourself dealing with a client lawsuit, you'll regret it if you don't have E&O Insurance. 

Errors and Omissions Insurance for Consultants

As a consultant, you provide important professional advice to your clients. Should a client be dissatisfied with your services or you find yourself in legal trouble because of alleged errors, you need to respond to the situation in the best possible way. With Professional Liability Insurance for consultants, you're protected from the costs of legal counsel and claims expenses.

Errors & Omissions Insurance Claims Examples

Do you have questions about an E&O policy? We have the answers. Continue reading to see if we answer your questions below. If not, we invite you to call one of our qualified insurance agents to provide further clarity and to help you get the best Errors and Omissions Insurance coverage possible.

What's the Difference Between Errors and Omissions Insurance and General Liability Insurance?

Errors and Omissions Insurance and General Liability Insurance both protect business owners from legal costs, but they cover different kinds of lawsuits. Errors and Omissions Insurance covers client disputes over the quality of your professional services—such as legal or financial advice. Contrarily, General Liability Insurance covers property damage and bodily injury to the customer because of your services rendered. 

What is the Difference Between E&O and Professional Liability Insurance?

Professional Liability Insurance, Errors and Omission Liability Insurance and Malpractice Insurance all refer to the same type of insurance and can be used interchangeably. Each term describes insurance meant to cover financial losses incurred by a client as a result of:

  • A failure to complete a professional service correctly (error)
  • A failure to complete a service that should have been rendered, or procuring advice that should have been presented (omission)

What Do I Need for an Errors and Omissions Insurance Quote?

Applying for Professional Liability Insurance is relatively straightforward, but it helps to have a sense of what you will need to prepare first. Before contacting your expert Krywolt Insurance broker, gather the following documents and information:

  • Number of years experience 
  • Revenue for the current year
  • Estimated amount of revenue for the next year
  • The revenue of your largest client
  • Your total payroll
  • Your business contact information
  • The number of employees that you have
  • When your business came under its current ownership
  • Your type of business structure
  • A brief description of the type of industry that you are in

How Much Does Errors and Omissions Insurance Cost?

Depending on the business operations and volume of annual revenue, Errors and Omissions Insurance costs can be less than $1000 per year. However, costs for Professional Liability Insurance for a high-risk business or a large volume business can be in excess of $50,000 per year. There are many different factors that go into establishing your insurance policy cost, including:

  • Amount of coverage
  • Claims history
  • Industry risk factors
  • Business size
  • Day-to-day operations

Is Errors and Omissions Insurance Legally Required?

Depending on your industry, Errors and Omissions Insurance may or may not be mandatory. For instance, the following professions require E&O Insurance:

  • Practicing lawyers
  • Medical professionals (Malpractice Insurance)
  • Contractors hired for government projects
  • Real estate agents

Even if you're not required to have Professional Liability Insurance, it's still a good idea to prepare for the worst and protect your business in the event of a lawsuit. 

Hire a Qualified Krywolt Insurance Broker Today!

Don't wait until it's too late, and protect your professional services business with a comprehensive Errors and Omissions Insurance policy. Reach out today, and one of our brokers will be able to find you the best policy for your needs. 

Get a fast, free quote now and get Krywolt Insurance confidence behind your business.

Frequently Asked Questions

What are the “Limits” on a Product Liability Insurance Policy?

The limits on product liability insurance will vary depending on whether you decide to get basic coverage or opt for advanced coverage. However, typically the limits on a product liability insurance policy ranges between $1,000,000 and $5,000,000. Usually, this policy's limit is part of a general liability insurance policy’s limit. 

How Do I Know if I Have the Right Product Liability Insurance Policy?

While a qualified broker at Krywolt Insurance will be able to ascertain your business' unique coverage needs and help you choose the right policy for you, it's important that you opt for a product liability insurance policy that:

  • Protects your business from bankruptcy 
  • Will protect you financially from the cost of replacing the defective, tampered product
  • Includes shipping, advertising and promotional expenses
  • Includes the cost of disposing of any defective products
  • Incorporates the cost of business disruption
  • Pays any fees to wholesalers, retailers and agents 
  • Helps your company repair its reputation after a lawsuit 

What Factors Impact Product Liability Insurance?

The primary factor that determines your product liability insurance cost is the amount of potential danger associated with your goods. If you work in a high-risk industry, your costs will naturally be more. However, there are other factors that influence your insurance premiums, including:

  • Policy limits
  • Your insurance claims history
  • Type of products 
  • Number of units sold
  • Annual and projected revenue
  • Size of distribution
  • Industry and company size
  • Factors related to shipping, storage, packaging, safety measures in place etc.

Is Product Liability Insurance Legally Mandatory for Retail and E-Commerce Stores?

No. In most industries, product liability insurance is not mandatory. That said, it's strongly recommended, especially if you sell, produce or distribute products that could easily result in claims against you—such as in the cosmetic and food industries. For instance, skin creams can lead to reactions and food items may cause food poisoning. 

What is the Difference Between Product Liability Insurance and General Liability Insurance?

Product liability insurance is essentially more focused than general liability insurance, as it only extends to damages being caused by a product you sold or manufactured. Alternatively, general liability provides protection for a wide range of instances where a third-party's property is damaged or is physically harmed on your premises. 

For instance, if your employee is mopping and a customer slips and falls, the subsequent insurance claim would be covered by general liability. But if a customer uses your product and has an allergic reaction, that would be covered by product liability. 

Do All Companies Need Product Liability Insurance?

If you sell, distribute, import or manufacture any type of goods—including food, clothing or technology—then you should have this coverage. It will protect your company in the event of legal action stemming from defective or faulty products. 

Does Product Liability Insurance Cover Problems with Software or an App?

This depends; coding mistakes and software errors may cause a business' operations to be affected—in which case you should have a professional liability/errors and omissions insurance policy; whereas product liability protects you against a customer who experienced physical harm because of your product. An example of this would be an exploding battery or faulty wiring leading to electrical shock. 

How Much Product Liability Insurance Does Your Small Business Need?

How much coverage you decide to buy depends on:

  • What product you sell or produce
  • How many products you sell or produce
  • The volume of sales
  • The number of parties involved in production

Typically, the more output the greater likelihood one of the products you make or sell will be defective. As your small business grows, you may have to adjust your policy for your changing needs. 

Why is Product Liability Insurance for Small Businesses Important?

If your business produces or sells products to customers, there is a chance your product could have a defect that causes injuries or damages a third-party's property. Without a proper product liability insurance policy, you'll be forced to pay out-of-pocket for:

  • The customer's medical costs to treat their injury
  • Legal fees and costs to defend your company
  • Settlements or compensations made against your company

What is Not Covered by Product Liability Insurance?

The only coverage provided by a product liability policy is for property damages or bodily injuries to a third-party caused by a product you sell or manufacture. Anything else, such as slip-and-fall injuries, financial loss from professional advice, or damage to your business itself, are covered with different insurance policies including general liability, professional liability and commercial property coverage.

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You need an insurance expert that understands Errors & Omissions Insurance to be able to define all the possible risks associated with your business so you get the best possible coverage to ensure that a single simple accident or oversight doesn’t overcome your business. You know your business, we know the risks and the ways to protect your business from potentially crippling law suits or loss.

We don’t offer instant online quotes for Errors & Omissions Insurance because there is no way we can get to know you and your business without speaking to you and coming to understand all the complexities or simple processes that need to be insured.
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