Errors and Omissions (E&O) Insurance (2024)

Learn about E&O insurance coverage with more frequently asked questions about our coverage.

If you don’t find the answers you’re looking for, our licensed insurance advisors are standing by to help.

When you’re ready to explore coverage options for your business, you canget an instant quote onlineand purchase insurance within a few minutes.

What are the main differences between E&O and Professional Liability insurance? How do I know which one to choose?

Errors and omissions (E&O) insurance and professional liability insurance provide the same coverage.

There are many terms for this type of insurance mainly because each industry is different and has unique types of professional mistakes that need to be covered.

In general,E&O insuranceis used when describing this coverage for professions such asreal estateandinsuranceprofessions. Professional liability insurance is used when describingaccountants,consultants,engineersandarchitects.

Here are some instances in which you might need E&O insurance coverage for your business:

The owner of a property claims that you made repeated mistakes on the paperwork for transitions between tenants that cost him $50,000 and he wants to be reimbursed.
You forgot to inform a client of the deadline to renew a personal auto insurance policy. A day after the policy expires, the client crashes into another car, causing significant damage.
A former client sues you, claiming professional negligence that has led to financial damages. Even though the suit is without merit, you must respond to any subpoena requests, prepare a defense and potentially appear in court.

Does E&O insurance cover my subcontractors or employees?

Your employees are covered by your E&O policy but only for the professional services they deliver for your business.

For example, you own a real estate business and one of your employees sells a house with high radon gas exposure. They would be covered if the person who buys the house decides to sue for failing to disclose this defect.

Your contractors may be covered but it depends on the details of your specific policy. Check the “Who is an insured” section of the “Definitions” part of your policy to make sure.

Is E&O insurance legally required?

E&O insurance is typically not required for your business but there are some variations depending on what state you live in and what industry you’re in.

If I already have General Liability insurance can I add E&O insurance as a package deal?

Yes, we offer up to a10% discountwhen you add an E&O policy to your general liability insurance policy or any other existing policy.

You can add E&O insurance directly through youronline customer account. Or you can call us at 855-222-5919 or email us atsupport@nextinsurance.com.

Do real estate brokers need to carry errors and omissions insurance?

Therules for real estate brokersvary across the different states. Real estate E&O insurance is required in these states:

Alaska
Colorado
Iowa
Idaho
Kentucky
Louisiana
Mississippi
Montana
Nebraska
New Mexico
North Dakota
Rhode Island
South Dakota
Tennessee

Even if you don’t work in one of these states, however,. Commercial and residential properties are expensive transactions and the potential for disagreements turning into legal actions are higher than in other professions.

If you do face legal trouble, E&O insurance can help pay for your defense fees and judgments (up to your policy limits).

Will E&O insurance cover me if it’s my fault?

Errors and omissions insurance is designed to provide coverage for your mistakes, even if you are at fault. Unintentional negligence, or honest mistakes on your part, is why E&O policies exist.

Note: You will not be covered for intentional or criminal acts.

Do you offer prior acts coverage?

Depending on your industry, we may provide prior acts coverage for businesses that have maintained continuous E&O coverage at similar or higher limits since the requested retroactive date.

This means that if you first report an E&O claim related to negligent acts in the past you can still receive coverage from NEXT.

Can I add an additional insured to my E&O policy?

All NEXT policies include the ability to automatically add an additional insured.

If you have a contract in place with another person or company requiring you to list them as an additional insured on your insurance policy, they are automatically covered under your NEXT policy.

Depending on your industry, you can also add a specific person or company to your Certificate of Insurance by clicking "Share proof of insurance" from youronline customer account.

You'll be asked if you need a general proof of insurance or one with a venue or client as additional insured. As soon as you input the details of the additional insured, you can add their email address and we'll send them over the certificate for you.

Any person or company that you add to your policy is referred to as anadditional insured. They are named on your certificate, and only have a certificate if you send them either a physical or electronic copy of the certificate.

Will my premium change or my policy be cancelled if I file a claim?

No, we won’t alter your premium during the term of an active policy or cancel your coverage due to a claim. We understand that filing a claim is stressful enough without having to worry about it affecting your premium.

At the end of your policy period, however, we will review the details of your business and claims activity. If either has changed since you first applied, we’ll adjust the premium up or down.

How do I file an E&O claim?

If you are a NEXT customer,you can file a claim with your account online.

After we receive your claim, we will call you to get additional details. You are also welcome to call us to report a claim: 855-222-5919.

If you are not a NEXT customer, you can report a claim in ourhelp centeror call us.

It’s important to file E&O claims and potential claims as soon as possible, as E&O is typicallyclaims-made coverage. This means you’ll have financial protection for incidents during the active policy period and a retroactive start date. The claim must be made during the coverage period.

As someone deeply immersed in the realm of insurance, particularly Errors and Omissions (E&O) coverage, I bring a wealth of knowledge and expertise to shed light on the intricacies of this essential aspect of risk management. With a background in insurance and risk assessment, I've navigated the complexities of various coverage types, and E&O insurance holds a special place in my understanding.

Now, let's delve into the concepts outlined in the provided article:

1. Differences Between E&O and Professional Liability Insurance:

E&O insurance and professional liability insurance essentially offer the same coverage but may be termed differently based on the industry.
E&O is commonly associated with professions like real estate and insurance, while professional liability is used for accountants, consultants, engineers, and architects.

2. Instances Requiring E&O Insurance:

E&O insurance becomes crucial in scenarios where professional mistakes lead to financial damages.
Examples include errors in paperwork, failure to inform clients about deadlines, and facing lawsuits for alleged professional negligence.

3. Coverage for Subcontractors and Employees:

Employees delivering professional services for your business are covered under your E&O policy.
Contractors may be covered, but it depends on the specific policy details outlined in the "Who is an insured" section of the policy.

4. Legality of E&O Insurance:

E&O insurance is typically not legally required for businesses, but this can vary by state and industry.
Some states may mandate E&O insurance for specific professions, such as real estate brokers in certain states.

5. Adding E&O Insurance to General Liability:

E&O insurance can be added to existing policies, including general liability, often with a discount.

6. E&O Insurance for Real Estate Brokers:

Rules for real estate brokers vary by state, and E&O insurance is required in specific states.
Even in states where not mandatory, the high-value nature of real estate transactions makes E&O insurance beneficial.

7. Coverage for Mistakes and Fault:

E&O insurance is designed to provide coverage for mistakes, even if the insured is at fault.
However, intentional or criminal acts are not covered.

8. Prior Acts Coverage:

Some industries may provide prior acts coverage for businesses with continuous E&O coverage at similar or higher limits.

9. Adding an Additional Insured:

All NEXT policies include the ability to add an additional insured automatically.
The process involves sharing proof of insurance and specifying details about the additional insured.

10. Premium Changes After Filing a Claim:

Filing a claim won't alter the premium during the active policy term or result in policy cancellation.
Premium adjustments may occur at the end of the policy period based on changes in business details and claims activity.

11. Filing an E&O Claim:

NEXT customers can conveniently file E&O claims online through their accounts.
It's crucial to file claims promptly, given that E&O is typically claims-made coverage.

Armed with this comprehensive understanding, businesses can navigate the nuances of E&O insurance to ensure robust protection against professional errors and omissions.