Errors and omissions (E&O) insurance is a type of protection that covers negligence claims against businesses and professionals [1]. As a form of liability insurance, it can financially protect business owners from allegations of mistakes or inadequate services .

We do not provide E&O insurance at Hiscox. Essentially, it’s an American insurance market product. Our nearest equivalent in the UK is professional indemnity insurance. This guide aims to tell you more about E&O insurance, and how E&O and professional indemnity cover are similar and different, for informational purposes. 

What types of businesses would use E&O in the US?


Engineers and lawyers are two common examples of professionals who could benefit from E&O insurance [1]. However, it can help to safeguard a wide range of professions that deliver services in exchange for a fee.

Depending on the policy, this insurance could support a company with legal and court expenses. It might also handle the costs of damages and settlements [2].

What is the difference between errors and omissions insurance and professional indemnity cover?


There are many definitions and ways of talking about both E&O in the US and professional indemnity in the UK.  If we were to look at it generally, not from the perspective of Hiscox products, we could say the  only real difference between errors and omissions insurance and professional indemnity cover is the name given to them. E&O insurance is the name commonly used in the US, while ‘professional indemnity’ is more common in the UK [3].

Although the exact terms, conditions and coverage differ between providers, the main principles are essentially the same. Both E&O and PI policies can help businesses handle the financial fallout of negligence claims launched by clients.

Learn more about E&O, PI and other covers with our handy business insurance glossary.

What does errors and omissions insurance cover?


Whether it’s called E&O or professional indemnity, this type of insurance commonly covers a business against claims of [4]:

  • Mistakes, negligence or poor advice
  • Copyright or trademark infringements
  • Negligent misrepresentation or misstatement
  • Defamation or false statements
  • Negligence relating to the transmission of a computer virus
  • Confidence breaches.

Since errors and omissions insurance focuses on advice and services, it’s geared more towards professionals, rather than those carrying out manual trades. It could step in if a client complains of financial losses due to incorrect advice, for example. Or if they allege your work has caused lasting harm to their reputation [5].

Just remember that the exact coverage will differ from one insurer to the next. So, research can be useful before signing up for any policy.

What does E&O insurance not cover?


The exact policy details will be different for each insurer. But whether it’s called E&O or professional indemnity insurance, here are some common exclusions [5]:

  • Breaches of tax regulations
  • Failure to meet employer obligations
  • Pension scheme mismanagement
  • Breaches committed recklessly or deliberately
  • Work completed before the policy began or prior to the retroactive date.

What is another name for E&O insurance?


Another name for E&O insurance is professional indemnity insurance. In fact, professional indemnity is a far more recognised term for this type of cover in the UK than ‘E&O’ or ‘errors and omissions’ [3]. Across the Atlantic in the US, you might also see E&O cover referred to as professional liability insurance [6].

Whatever name it’s given, the fundamental goal should be the same – to financially protect professional businesses who are accused of errors or negligence.

Is E&O insurance the same as E&OE?


E&OE is a legal term that stands for ‘errors and omissions excepted’. So, it’s completely different to E&O (errors and omissions) in the business insurance world. E&O insurance is a specific type of business insurance.

E&OE on the other hand, is a type of disclaimer used by businesses on things like price lists and product descriptions. It highlights that a document might contain unforeseen mistakes, or that some details may not be included [7].

So, while E&O and E&OE might sound similar, they ultimately serve different purposes for companies.

Is E&O insurance the same as Directors and officers (D&O)?


No, E&O and D&O insurance are separate types of business cover. While their names sound similar, they serve specific purposes.

D&O is short for directors’ and officers’ insurance. It’s a form of management liability insurance that can financially protect senior businesspeople against claims of wrongful acts [8]. These could include a breach of trust or a duty of care, for example.

In contrast, an E&O policy protects businesses more generally against accusations of mistakes or negligence.

References


  1. Hiscox, “Business insurance terms glossary”. 

    https://www.hiscox.co.uk/business-insurance/faq/business-insurance-terms-glossary..
  2. Investopedia, “Errors and omissions (E&O) insurance: What it covers”. 

    https://www.investopedia.com/terms/e/errors-omissions-insurance.asp.
  3. Entrepreneur Handbook, “What is errors & omissions insurance and how does it work?”. 

    https://entrepreneurhandbook.co.uk/errors-omissions-insurance/.
  4. Hiscox, “Professional indemnity – policy wording”. 

    https://www.hiscox.co.uk/sites/uk/files/documents/2017-09/15583-professional-indemnity-wording.pdf.
  5. Hiscox, “Professional indemnity insurance”. 

    https://www.hiscox.co.uk/business-insurance/professional-indemnity-insurance.
  6. NerdWallet, “Errors and omissions insurance: What E&O coverage is, where to get it”. 

    https://www.nerdwallet.com/article/small-business/errors-omissions-insurance.
  7. Cambridge Dictionary, “E&OE”. 

    https://dictionary.cambridge.org/dictionary/english/e-and-oe.
  8. Hiscox, ‘Company directors’ and officers’ insurance’. 

    https://www.hiscox.co.uk/business-insurance/company-directors.

Disclaimer:

Our FAQ pages provide general information and background around the topic covered. FAQ pages are reviewed and monitored periodically by our insurance experts. But the content is not intended to be read as advice and any material is for general information purposes only. If you would like advice for any content, please seek professional assistance.