Errors and Omissions Insurance

Errors and Omissions Insurance

Alleged or otherwise, mistakes are inevitable. That’s why Errors and Omissions Insurance is critical.

This policy provides financial coverage in case of accidental errors or alleged negligence.

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Claims Examples

Coverage

Problem: You run a small fertility clinic, and one of your sonographers fails to detect a rare condition during a patient’s ultrasound.

Outcome: The patient sues your clinic for negligence. Your E&O Insurance covers the legal expenses and monetary judgment, totalling $250,000.

Coverage

Problem: Your magazine publishing company runs a story referring to a local celebrity as ‘infamous’ following a series of scandals.

Outcome: The celebrity sues your magazine for libel and defamation. Your E&O policy covers the legal fees and settlement, totalling $33,000.

Coverage

Problem: You are an immigration consultant, and you accidentally forget to file your client’s application for permanent residency.

Outcome: The client successfully sues you for negligence. Your E&O Insurance covers the defence costs and monetary judgment, totalling $144,000.

Errors & Omissions Insurance, Explained.

What does Errors and Omissions Insurance cover?

Errors and Omissions Insurance is a type of professional liability insurance, which protects professionals from client claims alleging financial loss due to a service you provided, as well as lawsuits alleging misconduct, negligence, errors, omissions, and failure to deliver services as promised.

Errors and Omissions Insurance typically includes coverage for legal costs and damages related to the following coverage areas:

  • Professional Services: Coverage for Negligent Acts or errors or omissions related to your services, or failure to deliver a service as promised.
  • Products: Coverage for product failure (e.g., the product didn’t work as intended) or a physical injury (e.g., choking due to small pieces).
  • Media and Advertising: Media services resulting in your client getting sued for defamation, libel, or slander.

How much does Errors and Omissions Insurance cost?

For an Errors and Omissions Insurance policy with a limit of $100,000, you can anticipate spending on average $250 annually. 

The following factors are typically taken into consideration when determining the cost of your premium:

  • Industry and Services Offered
  • Years of Experience
  • Number of Employees
  • Annual and Projected Revenue
  • Business Size and Location

In the online quote application, we ask your business some questions to understand your coverage needs better.

Learn more about E&O insurance costs.

Who needs Errors and Omissions Insurance?

You need Errors and Omissions Insurance if:

  • You provide advice or offer services in exchange for a fee.
  • You provide or develop products or devices.

Depending on the profession, it may be referred to as Professional Liability Insurance or Medical Malpractice Insurance. For some occupations, carrying Errors and Omissions Insurance is required to practice.

How much Errors and Omissions Insurance do I need?

Canadian small business owners often ask how much coverage they need. Ultimately, you should purchase as much coverage as you can afford. When determining how much Errors & Omissions Insurance coverage to buy, consider the size of your business and employee base, your industry and profession, and level of risk exposure.

Speak with one of our brokers about customizing your policy to meet your specific business needs.

What is not covered by Errors and Omissions Insurance?

Errors and Omissions Insurance typically does not provide coverage for: 

  • Criminal, dishonest, or fraudulent acts (you need Crime Insurance); 
  • Violation of securities acts; 
  • Cost guarantees or price estimates; or, 
  • Incorrect estimates of profits or economic returns.

What is the difference between General Liability Insurance and Errors and Omissions Insurance?

Commercial General Liability Insurance covers third-party property damage or bodily injury, whereas Errors and Omissions Insurance covers lawsuits alleging neglect, misconduct, or failure to deliver advice or services as promised. Together, they form a comprehensive insurance policy package.

Frequently Asked Questions about Errors and Omissions Insurance

What is the difference between Errors and Omissions (E&O) Insurance and professional liability insurance?

Errors and omissions is a popular name for professional liability, they both refer to the same policy and provide coverage to professionals or consultants for errors and omissions in their services. In some industries, it’s also commonly known as malpractice insurance. Regardless of what you refer to it as, it may be important to protect your business practice with this policy.

What is the difference between D&O and E&O insurance?

The difference is that D&O (Directors and Officers) Insurance only applies to directors and officers of a company and E&O (Errors & Omissions) Insurance applies to any professional who provides a service. Both policies provide coverage for errors and omissions borne out of negligence.

Do I need E&O insurance if I work from home?

Yes, as long as you provide a service to a client, regardless of your location, you can be sued for errors and omissions arising out of negligence. It is best practice to protect yourself with insurance as legal costs and settlement fees are devastating for small businesses and freelance professionals.

Common E&O claims scenarios

Marketer looking at email

Problem: You run an AdTech startup in Ontario, and your platform is responsible for automatically deploying emails to a client’s internal and external database. When updating the client’s preferences, you accidentally deploy an email to the wrong audience, causing severe interruption to their business operations.

Outcome: The client successfully sues you for severely impacting the relationship with their clients. Your Errors and Omissions Insurance may cover the legal fees and any other expenses, totalling $100,000.

Realtor showing a house

Problem: You’re a realtor helping a client buy their first home in Vancouver, BC. While looking around a property, the client states they’d purchase the house if it was possible to build a garage on the property. Without thinking, you say it’s certainly acceptable to add a garage. Months later, after the purchase, the client sues you when they were declined for the permit to allow to build.

Outcome: The client sues you for professional negligence. Your E&O Insurance may cover the legal fees and any other expenses, totalling $60,000.

Wedding photoshoot

Problem: You’re the owner of an event company in Alberta. Days before hosting a wedding, you realize you’d overlooked booking the photographer that was requested a month earlier and scrambled to find a replacement. After the wedding, the client sues you for your negligence after believing the pictures to be below-par to what they would’ve got with their original choice.

Outcome: Your Errors and Omissions Insurance could cover the legal fees and any other expenses, totalling $20,000.

Other business insurance coverage options to consider:

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