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What is errors and omissions insurance?

Also known as professional liability insurance, errors and omissions insurance provides protection if a client takes legal action against you as a result of or failure to provide your professional service or advice resulting in financial loss. Your coverage includes legal costs, awards, and settlements up to your policy limit. You must pay a deductible and not all scenarios are covered (intentional criminal acts, for example).

Why do I need errors and omissions insurance?

If you’re a professional who provides advice or a service, errors and omissions insurance is essential coverage. Architects, accountants, actuaries, consultants, contractors, designers, engineers, health professionals, lawyers, photographers, social services, and anyone else whose job is to provide consultation or professional services or advice should be protected by this type of liability coverage. You can be held liable for financial damages to your clients as a result of your professional advice or service, or your failure to provide it. Errors and omissions insurance or professional liability insurance can help cover your legal expenses including defence costs, awards, and settlements up to your policy limit. This protects your financial security and allows you to fight to save your reputation.

What is covered by errors and omissions insurance?

EasyCover’s errors and omissions insurance protects your financial security in a number of scenarios involving a client or third party’s financial loss as a result of your professional service or advice (or failure to provide it). This can include:

  • A negligent act, error, or omission
  • Misrepresentation
  • Libel and slander
  • Failure to deliver due to a third party
  • Intellectual property infringement
  • Breach of confidentiality
  • Delays
  • Failure to provide a service
  • Inaccurate advice
  • Loss of documents

Errors and omission insurance will help cover your legal expenses, including defence costs, settlements and awards up to your policy limit (which applies over the policy term of 12 months, not per covered claim). You’ll be responsible for paying a deductible per insured claim as well.

How does errors and omissions insurance work?

Errors and omissions insurance protects you if a client or third party sues you for financial loss as a result of a provided or failure to provide professional service or advice. EasyCover errors and omissions insurance offers a unique benefit: an unlimited retroactive date. What does this mean? It means our insurance protects you for any new allegations or claims made against you for past work (so long as you only became aware of the grievance after purchasing your EasyCover policy and it’s reported).

There are a few important things to remember with errors and omissions insurance:

  • You must report any situation which may lead to legal action against you – failure to do so can result in a claim not being covered.
  • A policy limit applies and covers the entire policy term (12 months), not each individual claim.
  • You must pay a deductible for each covered claim (your deductible is determined by your business’ revenue).
  • Bodily injury and property damage claims fall under commercial general liability, which is separate insurance coverage (unless it was caused directly by a negligent act, error or omission as part of a professional service or advice)
  • Deliberate or dishonest acts aren’t covered.

How can I find the most appropriate errors and omissions insurance for my profession?

Each industry or profession has different risks. EasyCover offers specialized policies that focus on the particular liability risks for a profession, including:

  • Consultants (for a variety of industries)
  • Contractors (for a variety of industries)
  • IT/Computer
  • Engineering
  • Health professionals
  • Managers
  • Construction
  • Social services
  • Finance professionals
  • Legal services
  • Photographers
  • Forensic experts
  • New media professionals

If your profession isn’t listed here, don’t worry! Give us a call and we’ll see what we can do.

There are also different levels of coverage for policy limits. For example, EasyCover provides three options:

  • $1 million
  • $2 million
  • $5 million

This is the limit of what can be paid out over the policy term (12 months), regardless of how many claims there are. You should choose the level of coverage that best reflects your risk of a lawsuit, the value of your work, and the potential cost of legal defence.

Things to Remember When Purchasing Errors and Omissions Insurance

Purchasing the cheapest insurance may not be in your best interests: you could find yourself inadequately covered in the event of a claim. Your policy should balance your coverage requirements and your budget. Lawsuits are expensive and even if the claims are unfounded, you’ll still need to pay for representation. Errors and omissions insurance can help protect you and your business and give you peace of mind.

You should also inquire if there is a retroactive date. While EasyCover offers an unlimited retroactive date (meaning your past work is protected and any new allegations or claims made against you will be covered, so long as there was no prior knowledge of them), many other insurers have limits.

Finally, ensure you understand your policy. Know what is and what isn’t covered as well as your duties when it comes to reporting potential legal claims against you.

You can always chat with one of our professional insurance brokers. They can help answer your questions and point you in the right direction.