errors and omissions e o insurance is a type of liability insurance that covers claims against your business for mistakes you made or services you failed to provide e o insurance protects your business from claims by clients for negligence malpractice errors or omissions you allegedly made while providing a professional service the insurance helps pay for your legal fees and any owed damages or settlements 
understanding e o insurancee o insurance also known as professional liability coverage protects your business from claims by clients for errors or mistakes faulty advice or failure to provide the level of service your client expected it also covers claims based on your failure to do the work meet a deadline or otherwise fulfill the terms of a contract for example suppose a furniture manufacturer hires your it consulting company to upgrade its computer aided manufacturing software several months later the client sues your company for 50 000 claiming you provided inadequate advice on using the new software because of your faulty instructions their machinery malfunctioned and they were unable to fill two large orders an e o policy might pay for damages or settlements arising from those claims it may also cover attorneys fees court costs and other legal expenses your insurer incurs to defend your business against the lawsuit whether or not the claim is valid or your business is found liable 2if you do business outside the u s look for an e o policy that applies worldwide avoid any policy that restricts coverage to incidents occurring in the u s who needs e o insurance you should consider buying an e o policy if your business involves giving advice or providing a professional service for a fee many types of businesses fit this description including accountants architects real estate agents consultants financial advisors wedding planners fitness instructors and physical therapists some types of professionals may be required by state or federal law to buy e o insurance before going into business such as attorneys contractors and medical professionals some businesses may need e o insurance to get or renew a professional license or to comply with the terms of a client contract 3