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Errors & Omissions Insurance

Safeguard your company against client disputes stemming from human errors or unmet expectations in providing professional services.

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Coverage worth
50 Lakhs
at just
20,000*
annually

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50+ years of collective insurance experience

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5,000 Cr+ of cumulative risks insured

What Is

Errors & Omissions Insurance?

Errors & Omissions Insurance acknowledges the inherent risk in offering expert services: the risk of making a mistake or failing to meet a client's expectations.

The unique value of E&O insurance lies in its coverage of claims arising from your professional services (or tech product). Whether it's an oversight in a contract, copyright infringement, a missed deadline, an error in a financial analysis, or alleged negligence, E&O insurance can cover the cost of defending your business in court, as well as any settlements or judgments you're required to pay.

Facing a claim without E&O insurance can drain your time, resources, and focus from serving your clients. With an E&O policy, your insurer takes on much of the burden of a claim, allowing you to continue your work with minimal disruption.

E&O Insurance provides coverage for errors such as:

  • Copyright infringement
  • Defamation
  • Errors, mistakes, or oversights incurred during the course of work
  • Failure to meet a deadline or deliver a specific service promised to a client
  • Failure to meet a deadline or deliver a specific service promised to a client
  • Professional negligence
  • Failure to meet a specific standard of care, especially if outlined by a given profession

Who Needs

Errors & Omissions Insurance?

If your company performs a professional service, you run the risk of your client claiming that they suffered financial loss due to a faulty tech product or failure in your service. Errors & Omissions Insurance is designed for companies that sell tech products and professional services.

The types of businesses that need professional liability coverage to mitigate their risk include:

  • SaaS, PaaS, IaaS
  • Banks, NBFCs, Fintech
  • Edtech
  • E-commerce
  • IT services
  • B2B consulting
  • Media & advertising
  • Doctors, lawyers, architects, etc

The highest number of E&O claims in India are filed against architects, engineers, and lawyers.

Why Get

Errors & Omissions Insurance?

In a tech company, the majority of work involves creating software, developing applications, managing data, and providing professional services. These activities come with inherent risks that can lead to financial losses and legal disputes. Errors and Omissions Insurance is vital for your tech company because it provides protection against:

Claims from Clients: Despite your best efforts, errors, software bugs, or unintentional omissions can occur, potentially causing harm to your clients' businesses. E&O Insurance provides coverage for claims arising from financial losses, property damage, or business interruptions caused by your products, services, or advice.

Legal Defense: Defending your tech company against claims or lawsuits can be financially burdensome. E&O Insurance not only covers settlements but also includes legal defense costs. This means you'll have the necessary resources to hire legal experts who specialize in technology-related litigation, ensuring a robust defense for your business.

Professional Services Coverage:If your tech company provides professional services, such as consulting or implementation support, E&O insurance can protect you from claims related to errors, delays, or inadequate performance. This coverage ensures that your clients are financially compensated for any harm caused by mistakes or shortcomings in your professional services.

Why is Errors & Omissions Insurance essential?

Cases involving allegations of copyright infringement, negligence in work, and defamation have increased by more than 50% in India in the recent years.

As clients challenge any deficiency in service delivery mechanisms, the risk of facing financial loss claims is on the rise. Regardless of the quality of your offering, mistakes and dissatisfied customers are a part of doing business.

Errors & Omissions (E&O) insurance provides financial security, preserves your reputation, and instills confidence in clients. With E&O insurance, you can focus on delivering exceptional service without worrying about potential legal repercussions.

Key Factors to Consider When Purchasing E&O Insurance:

  • Business size and risk exposure: Larger businesses typically face greater risks and should prioritize acquiring E&O insurance.
  • Litigation-prone industries: If you operate in an industry with a high likelihood of legal disputes, securing E&O coverage is particularly essential.
  • High-value clients and shipments: When dealing with clients who require a superior level of service or handling high-value shipments, having E&O insurance may be expected.
  • Geographic location: If your business operates in an area with a high incidence of lawsuits, it is advisable to obtain E&O insurance coverage as soon as possible.

Discover the advantages of Errors & Omissions (E&O) insurance coverage:

Legal Representation Costs

Legal Representation Costs

E&O Insurance safeguards you from the financial burden of legal representation expenses when facing lawsuits. Whether in court or negotiating with regulators, this coverage ensures you have the support you need, including the cost of settlements.

Employee Dishonesty

Employee Dishonesty

Protect your business from third-party claims resulting from frauds or dishonest acts conducted by your employees. E&O Insurance covers investigation costs, legal fees, and damages caused by their actions.

 Automatic Subsidiary Coverage

Automatic Subsidiary Coverage

Newly created or acquired subsidiaries will be seamlessly incorporated into the policy, requiring only a minimal amount of additional paperwork. However, this inclusion is contingent upon the acquired company being not more than one-fourth the size of the company implementing the policy.

Error in Service

Error in Service

If an employee makes an error while providing a service, then E&O insurance covers resulting claims.

Mitigation Costs

Mitigation Costs

In case of errors and omissions, you might need to take steps to reduce or prevent further damage or loss. The policy can help cover the cost of repairs, replacements, and other expenses incurred in such cases.

 Court Attendance Fees

Court Attendance Fees

Cover losses for attending court due to an E&O lawsuit, including lawyer's fees, travel expenses, and lost wages.

 Loss of Documents

Loss of Documents

In case of a lawsuit alleging loss or destruction of important documents, this policy will cover the legal and claim charges.

 Professional Inquiry Investigation

Professional Inquiry Investigation

If an investigation or inquiry is conducted by a professional regulatory body, such as an industry association or government agency, this coverage indemnifies the loss incurred by the insured. It covers the costs of legal fees, settlements, fines, or judgments that may arise from such an investigation.

Coverages & Exclusions in

Errors & Omissions Insurance
CoveragesExclusions
Experience the convenience of Errors & Omissions (E&O) insurance with these key features:
Automatic Subsidiary Coverage
Newly created or acquired subsidiaries will be seamlessly incorporated into the policy, requiring only a minimal amount of additional paperwork. However, this inclusion is contingent upon the acquired company being not more than one-fourth the size of the company implementing the policy.
Professional Inquiry Investigation
If an investigation or inquiry is conducted by a professional regulatory body, such as an industry association or government agency, this coverage indemnifies the loss incurred by the insured. It covers the costs of legal fees, settlements, fines, or judgments that may arise from such an investigation.
Mitigation Costs
In case of errors and omissions, you might need to take steps to reduce or prevent further damage or loss. The policy can help cover the cost of repairs, replacements, and other expenses incurred in such cases.
Court Attendance Fees
Cover losses for attending court due to an E&O lawsuit, including lawyer's fees, travel expenses, and lost wages.
Loss of Documents
In case of a lawsuit alleging loss or destruction of important documents, this policy will cover the legal and claim charges.
Error in Service
If an employee makes an error while providing a service then E&O insurance covers resulting claims.
Employee Dishonesty
Protect your business from third-party claims resulting from frauds or dishonest acts conducted by your employees. E&O Insurance covers investigation costs, legal fees, and damages caused by their actions.
Legal Representation Costs
E&O Insurance safeguards you from the financial burden of legal representation expenses when facing lawsuits. Whether in court or negotiating with regulators, this coverage ensures you have the support you need,including the cost of settlements.

Errors & Omissions Examples

Incident 1Incident 2
Flawed Fabrication & Erection of Structure
Incident
The insured provided multiple inaccurate design drawings, leading to improper fabrication and consequently necessitating re-fabrication. The principal incurred additional expenses and was required to employ extra manpower to address these issues.
Resolution
The insurer demonstrated a proactive approach by assuming control of the situation and successfully proving that the policyholder was not responsible for all the errors. This strategic intervention allowed for a substantial reduction in the damages ultimately borne by the policyholder and the compensation was paid by the Insurer.

About Errors & Omissions Insurance

What is the jurisdiction/territory of the claim? Plus Icon
What limits do you need? Plus Icon
Do I need E&O if I already have D&O, general liability, and product liability insurance? Plus Icon
Is errors and omissions insurance required by law? Plus Icon
What are the most common reasons for claims in E&O policies? Plus Icon
Does E&O cover negligence? Plus Icon
Is E&O insurance paid monthly or yearly? Plus Icon
Is E&O insurance tax deductible? Plus Icon
Does E&O insurance have a deductible? Plus Icon
What are the two types of limits offered in E&O policies? Plus Icon
Does E&O insurance cover breach of contract? Plus Icon
When should E&O claims be reported? Plus Icon
Why do insurance claims get rejected? Plus Icon

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This is an article by YouStory written by Palak Agarwal and published on October, 2022

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