Errors and omissions insurance or E&O insurance is a type of professional liability insurance that covers liability for professional mistakes. E&O insurance is sometimes referred to as business insurance, but it covers any kind of business, even small ones. An individual has this kind of insurance in his or her own name or for their business. In this guide we discuss the best companies who offer E&O insurance policies.
Overview of Best E&O Insurance Companies
Errors and omissions insurance (E&O) protects you and your business from the costs associated with lawsuits resulting from things you do or neglect to do in the process of providing services. Mistakes happen, it’s unavoidable. The cost of E&O insurance is pretty low and it can be a big mistake to not have E&O coverage. We’re going to look at several E&O providers to determine who provides the best E&O policy.
Nationwide offers a comprehensive errors and omissions insurance policy. The Ohio based Fortune 100 Company, Nationwide, has been around nearly 100 years. They’re one of the biggest and most diversified insurance companies in the country. They boast a customer-focused approach that puts their members’ needs first and keeps them at the heart of their business. They have an incredibly wide variety of insurance options available and JD Power ranked them number one for overall customer satisfaction two years in a row and last year they also ranked first in policy offerings and claims factors and second in overall website experience. If you’re looking for errors and omission insurance, Nationwide would be the gold-standard.
As the largest publicly traded P&C insurance company in the world and the largest provider for commercial insurance in the United States, Chubb has a wide array of insurance options available as well. Their website provides a good user experience, however, getting a quote requires connecting to an insurance agent. They consider themselves craftsmen, molding their insurance coverage to their customer’s needs. That customer-centric ideal is probably what earned them second place on JD Power’s 2019 Small Commercial Insurance Satisfaction Study. While bigger doesn’t always necessarily mean better, they would be a solid choice for E&O insurance.
With close to 100 years of experience and customer service under their belt, State Farm has positioned itself as your neighbor rather than simply your insurance provider. They make a point to say that being a good neighbor isn’t just about being there for you when bad things happen, it’s also about being there for all the joyous occasions in between. While their website UX and ease of getting a quote are nothing really special compared to the top 2, they did rank 4 out of 5 for insurance options. You could definitely do worse for your E&O provider.
As another company with a people-first motto, the Hartford aims to provide great coverage to help their customers move forward with their business goals and give back to the community with social change and overall progress as the goal of their community outreach, charity programs, and activism. Their interest seems to be to use innovation and activism to push for lasting and meaningful social change. Their website is relatively user-friendly and their available insurance options are impressive. They do need to stay on top of their website maintenance though because their “Get a Quote” button didn’t work.
The Hiscox insurance company is approaching one and a quarter-century of service to small businesses. In fact, small businesses specifically are their specialty and their passion. They say they aim to empower small business growth by providing the protection that small business owners need to take the risks that will allow them to expand. They call this member-centric, risk/reward focused approach “encouraging courage” in small business. With nearly half a million small businesses as current customers, their method does seem to be effective. Their quote process is long and complex, requiring a lot of detail, however, that could be seen as the best way to get an accurate E&O quote.
Allstate is an insurance provider that wants to make sure their customers are in good hands. When there’s a natural disaster in the country, Allstate always does their best to be there with supplies, aid, and speedy payouts for its customers. Their focus is on improving their community with this kind of outreach to make sure people have what they need when they need it most. While that all sounds great and may truly be their goal, almost all their metrics are average at best. They do make it pretty easy to get an automated quote, however, they aren’t breaking any records. They might not be the right company for your errors and omissions needs.
As the world’s 6th largest P&C insurer with a 77 Fortune rating, Liberty Mutual has won several awards for being a top employer. They have programs to drive innovation, promote diversity and inclusion, and cause social change. While they seem to be genuinely great employers, they can’t really say the same about their role as insurance providers. Their available insurance options were above average, but not phenomenal. By every other standard though, they were either about average or far below par. They didn’t even make the top 10 on JD Power’s 2019 Small Commercial Insurance Satisfaction Study. Your E&O.
What Does E&O Insurance Cover?
E&O insurance covers you for any legal claims that may be filed against your business, but it is primarily designed to protect your company from claims made by customers or employees who believe they were subjected to negligence or a lack of knowledge or skill in performing their duties. Errors and omissions is a broad term which covers any mistake in the execution of a customer’s order, the quality of the product or service supplied, or the timeliness of delivery or processing of orders received by the company.
Errors and omissions also cover the failure to provide the necessary information required for a client’s order, or failed to deliver goods or services in the manner ordered. It also covers the failure of a company to maintain a good working environment, including making sure that employees wearing protective clothing are not exposed to harmful elements such as moisture and smoke.
What Does Error and Omissions Insurance Not Cover?
E&O does not cover bodily harm or property damage which have their own unique insurance coverage. E&O insurance covers a very specific type of liability – mainly financial mistakes caused by negligence. Here are some examples of common claims that may sound like E&O would cover them but are actually covered by other types of insurance.
|Claim||Business Insurance Policy|
|Employee injury||Workers Comp|
|Customer Injury||General Liability|
|Car damage||Commercial Auto|
|Property Damage||Commercial Property|
How Does Errors and Omissions Insurance Work?
You will want to use your E&O insurance when either you or your employee makes a negligent mistake. For example, say you own a digital marketing company and you recommend to a client a certain paid search campaign in which the client invests thousands of dollars. Then say that campaign goes very poorly and your client loses most of their ad spend. They may come back and sue you for negligence of failure to deliver on services. If you have an E&O policy, you can file a claim and use the payout to cover your legal costs.
How Much Do E&O Policies Cost?
For small businesses with 10 employees or fewer, the average E&O insurance cost is going to come out to about $1,735 per year or $144 per month. Like we said, fairly low cost, especially for a ten person business.
That number goes even lower however when we look at the median policy cost. . Looking at the median in cases like this can often be more representative and accurate. The median monthly cost of E&O insurance is around $59, or an annual cost of $713. If you operate a small boutique firm for example, you likely will not pay more than $1,500 per year.
Professional Liability Insurance vs E&O Insurance
Professional liability insurance and errors and omissions insurance are often used interchangeably. They are not exactly the same though. It’s a bit of a “all rectangles are squares, but not all squares are rectangles” type situation.
Professional liability insurance is a generic term for coverage that protects you from work-related liability. E&O insurance is a specific type of professional liability insurance that shields professionals who provide advice and/or services. Usually accountants, tax preppers and real estate agents will get “errors and omission insurance” while professions like engineers and architects will get PLI.