Errors and omissions insurance (E&O) is a type of professional liability insurance that protects companies and their workers or individuals against claims made by clients for inadequate work or negligent actions. Errors and omissions insurance often covers both court costs and any settlements up to the amount specified by the insurance contract.
Any professional who offers a service for a fee could be sued for incomplete, inferior, or inadequate work, which is why they should carry E&O Insurance.
E&O Insurance covers the costs associated with defending your client's business against a disgruntled customer's professional negligence claim. Costs such as attorney fees, court costs, and witness fees may be included, plus any judgments, settlements, or damages (up to the policy limit).
Errors and Omissions Insurance policies will not cover fraudulent or illegal activity, nor will it compensate for intentional acts of negligence, only responds to economic losses.