If your business provides professional advice, specialized services, or expertise for a fee, you could be held financially responsible for mistakes — even honest ones. Errors and omissions insurance helps protect you when a client claims your work caused financial harm.
But who actually needs errors and omissions (E&O) insurance, and why? In this article, we break down what errors and omissions insurance covers, the types of businesses and professions that need it most, and how to decide if it’s right for you.
Here’s a quick summary:
Errors and omissions insurance — also known as professional liability insurance — protects businesses and professionals when clients accuse them of making mistakes, providing inaccurate advice, or failing to deliver services as promised. If a business or contractor has clients who depend on their professional service, E&O coverage is typically a smart idea.
Even highly skilled professionals can be accused of making errors that cost their clients money. Errors and omissions liability insurance helps protect you if a client alleges:
For example:
All three of these business owners might face costly claims, and their E&O insurance policies can help defend them and cover the costs.
If a claim is filed against you, your insurance provider can hire an experienced, carefully vetted lawyer to defend you. Legal costs covered by errors and omissions insurance include attorneys’ fees, court costs, expert witness fees, and administrative and arbitration costs. Legal fees can be substantial, and without E&O insurance coverage, you could end up paying them yourself.
If the case doesn’t go your way, your E&O insurance policy can help pay settlements negotiated out of court, court-awarded judgments, and certain fines or penalties that may come up. Without insurance, these potentially devastating costs come directly out of your pocket.
If you’re investigated by a professional regulatory or licensing board, some insurers, such as Berxi, will hire defense counsel for you and pay attorneys’ fees resulting from the investigation.
While not covered by all providers, some insurance companies like Berxi will reimburse you for lost wages and expenses incurred while attending depositions, trials, hearings, or arbitration proceedings in support of your defense. For example, if you miss a full day of earning hourly income because you must attend a court event, your insurance will reimburse you for those lost wages.
Any professional or business that provides advice, specialized knowledge, creative services, or expertise for a fee should consider carrying E&O insurance. Even when you do everything right, misunderstandings, miscommunications, and unexpected outcomes can still trigger claims.
Below are some of the industries where errors and omissions liability insurance is most essential.
People rely on financial professionals like accountants, bookkeepers, financial planners, and tax preparers to help them manage their livelihoods and long-term security. A single mistake — or even a perceived error — can have serious consequences. E&O insurance is critical for:
Common claim scenarios may include:
While E&O insurance isn’t legally mandated for financial professionals in most states, many clients and companies require proof of coverage in order to contract with them.
Because real estate professionals regularly handle large transactions, legal documents, and time-sensitive negotiations, they can be especially vulnerable to E&O risks, such as:
In addition, the high dollar amounts involved in real estate deals mean that E&O claims can be especially costly.
Consultants sell expertise — which means clients rely heavily on their recommendations. If a project doesn’t deliver the expected results, clients may seek reimbursement. Consultants who should consider errors and omissions insurance include:
Common risks may include:
Even if a consultant’s recommendations aren’t the direct cause of a negative outcome, they can still be held responsible and may need an attorney to defend them.
Insurance professionals are responsible for guiding clients through complex policy requirements and coverages. Miscommunication or paperwork errors can translate into major financial losses. Insurance businesses and professionals who need errors and omissions insurance include:
Typical insurance industry E&O claims may involve:
Given the regulatory environment, insurance professionals are almost always legally required to have E&O insurance.
Marketing and creative professionals often face tight deadlines and high client expectations. Missteps can easily impact a client’s brand or revenue. Business and professionals in this space who can benefit from E&O insurance include:
Claims in this sector often relate to:
The quality of creative work can be subjective. So if work doesn’t meet a client’s expectations, as subjective as that may seem, the client can still sue.
Tech professionals often deal with complex systems, proprietary data, and critical business infrastructure. When something goes wrong, the financial impact can be substantial. High-risk tech professions that can benefit from errors and omissions insurance coverage include:
E&O claims in this field may involve:
In some cases, yes. Certain industries and states mandate E&O insurance for licensing or regulatory compliance. Examples include:
Failing to maintain legally required E&O coverage can result in:
Even when not legally required, E&O insurance is often necessary to secure valuable contracts. Many clients — especially large corporations — require proof of E&O coverage before signing a service agreement.
In other words: errors and omissions insurance isn’t just protection; it can be a competitive advantage.
Without E&O insurance, one lawsuit could devastate your business, even if the claims are baseless. Here’s why carrying coverage is essential:
Defense costs alone can exceed the cost of an annual E&O insurance premium many times over. Even if a case doesn’t go to trial, the hourly fees for lawyers going back and forth in negotiating or closing a claim can cost tens of thousands of dollars.
No matter how careful a professional is, mistakes and oversights can happen:
Risk management techniques like careful documentation and QA practices can help prevent honest mistakes, but a top-tier E&O insurance policy ensures that an honest mistake doesn’t jeopardize your financial stability.
Many claims arise from miscommunication, unrealistic expectations, or simple client dissatisfaction — not actual negligence. Even when a client misunderstands instructions or ignores advice, professionals can still be named in a lawsuit. With errors and omissions liability insurance, you can rest assured that a false claim won’t lead to a tough financial blow.
Carrying E&O coverage signals professionalism and instills confidence in clients, making them more likely to choose your services.
If you’re unsure whether you should carry E&O coverage, start with this quick self-assessment.
In most cases, if you answer “yes” to even one of these questions, E&O insurance is a smart investment. The good news: the price of E&O insurance is often more affordable than business owners expect — and the peace of mind is invaluable.
To see how much you might pay, get an instant quote from Berxi. You might be surprised how much you could save.
Whether you’re a consultant, small business owner, freelancer, or part of a larger organization, Berxi makes it easy to get the protection you need. You can:
If you provide professional services, don’t leave yourself open to unnecessary risk. E&O insurance is one of the simplest ways to protect your business and your peace of mind.
Sometimes. Industries like accounting, real estate, and insurance often have state or federal E&O requirements, and many contracts require it even when the law does not. Learn more about the types of businesses that require E&O insurance.
No. Errors and omissions insurance covers negligence, errors, and unintentional omissions — not deliberate wrongdoing. E&O policies always contain exclusions barring coverage for intentionally fraudulent or illegal acts.
Absolutely. In fact, contractors and freelancers are often required by clients to carry their own professional liability coverage.
Errors and omissions insurance protects you against claims alleging professional missteps, such as bad advice, unintentional mistakes, or failure to properly deliver a service. General liability insurance is designed to cover third-party claims of property damage, bodily injury, or reputational harm. It applies in situations such as a client slipping and falling at your place of business or an employee accidentally damaging a client’s property. Most businesses need both E&O insurance and general liability insurance for complete protection. Learn more about the differences between E&O insurance and general liability insurance.
Image courtesy of iStock.com/FangXiaNuo
Image courtesy of iStock.com/Hispanolistic
Image courtesy of iStock.com/Liubomyr Vorona
More:
The views expressed in this article are those of the author and do not necessarily reflect those of Berxi™ or Berkshire Hathaway Specialty Insurance Company. This article (subject to change without notice) is for informational purposes only, and does not constitute professional advice. Click here to read our full disclaimer
The product descriptions provided here are only brief summaries and may be changed without notice. The full coverage terms and details, including limitations and exclusions, are contained in the insurance policy. If you have questions about coverage available under our plans, please review the policy or contact us at 833-242-3794 or support@berxi.com. “20% savings” is based on industry pricing averages.
Berxi™ is a part of Berkshire Hathaway Specialty Insurance (BHSI). Insurance products are distributed through Berkshire Hathaway Global Insurance Services, California License # 0K09397. BHSI is part of Berkshire Hathaway’s National Indemnity group of insurance companies, consisting of National Indemnity and its affiliates, which hold financial strength ratings of A++ from AM Best and AA+ from Standard & Poor’s. The rating scales can be found at www.ambest.com and www.standardandpoors.com, respectively.
No warranty, guarantee, or representation, either expressed or implied, is made as to the correctness, accuracy, completeness, adequacy, or sufficiency of any representation or information. Any opinions expressed herein are subject to change without notice.
The information on this web site is not intended or implied to be a substitute for professional medical advice, diagnosis or treatment, and does not purport to establish a standard of care under any circumstances. All content, including text, graphics, images and information, contained on or available through this web site is for general information purposes only based upon the information available at the time of presentation, and does not constitute medical, legal, regulatory, compliance, financial, professional, or any other advice.
BHSI makes no representation and assumes no responsibility or liability for the accuracy of information contained on or available through this web site, and such information is subject to change without notice. You are encouraged to consider and confirm any information obtained from or through this web site with other sources, and review all information regarding any medical condition or treatment with your physician or medical care provider. NEVER DISREGARD PROFESSIONAL MEDICAL ADVICE OR DELAY SEEKING MEDICAL TREATMENT BECAUSE OF SOMETHING THAT YOU HAVE READ ON OR ACCESSED THROUGH THIS WEB SITE.
BHSI is not a medical organization, and does not recommend, endorse or make any representation about the efficacy, appropriateness or suitability of any specific tests, products, procedures, treatments, services, opinions, health care providers or other information contained on or available through this web site. BHSI IS NOT RESPONSIBLE FOR, AND EXPRESSLY DISCLAIMS ALL LIABILITY FOR, ANY ADVICE, COURSE OF TREATMENT, DIAGNOSIS OR ANY OTHER SERVICES OR PRODUCTS THAT YOU OBTAIN AFTER REVIEWING THIS WEB SITE.
Click to collapse disclamerWant Berxi articles delivered straight to your inbox? Sign up for our monthly newsletter below!
"*" indicates required fields
Lauren Garcia Mar 25, 2025
Want Berxi articles delivered straight to your inbox? Sign up for our monthly newsletter below!
