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What is Errors and Omissions Insurance

According to Business News Daily, there are more than 4 million small businesses in California and these small businesses make up 99.8% of all businesses within the state. Small businesses that provide professional services or give advice to clients should consider purchasing Errors and Omissions insurance in California. Errors and omissions insurance is commonly known as professional liability insurance. This is a special type of insurance policy that covers your business against claims made by your clients because of professional advice or a service that you offered caused financial damage to them. The financial harm may be caused due to some mistake on your part (errors) or because you did not perform some essential service (omissions).

Take for example you offered a professional service that did not suit your customer. They suffered personal and financial damages after using your offering. As a result, the customer initiates a lawsuit against your company. In such a situation, an Errors and Omissions Insurance policy can help you meet expenses incurred while defending your company.

What does Errors and Omissions Insurance cover

The following aspects are covered under Errors and Omissions Insurance California:

  • Actual or alleged negligence: The policy protects your business against both actual and alleged claims of errors and omissions that may have occurred while providing professional services.
  • Legal expenses: All legal expenses incurred while defending your company such as lawyers’ fees, documentation and underwriting charges, and administrative costs are covered by errors and omissions insurance.

Who needs Errors and Omissions Insurance?

Professionals and businesses that provide professional services such as giving advice, making educated recommendations, designing solutions or representing the needs of others all have errors and omissions liability exposure. Errors and Omissions Insurance can safeguard your professional reputation, profitability, and business assets from the potentially astronomical expenses of litigation (whether justified or not).

Professions that need Errors and Omissions Insurance are:

Architects Personal trainers
Consultants Pilates instructors
Engineers Notary publics
Home health providers and businesses Yoga Instructors


How much does Errors and Omissions Insurance cost

On average, the yearly cost of Errors and Omissions Insurance for small businesses in California is around $773.

The cost of Errors and Omissions Insurance is heavily influenced by the types of occupation it provides cover for. In general, riskier the occupation, the higher the cost.

Other key factors that play a part in determining the cost are:

  • Your business turnover and size
  • The amount of insurance cover you require
  • The individuals being covered – are they qualified for the job they are performing, and do they have a previous history of claims?
  • Your individual claims history

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