Errors and Omissions Insurance: What E&O Is, Where to Get It
Making a mistake, or just being accused of one, can create legal problems. Errors and omissions insurance may help.
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Errors and omissions insurance protects businesses against claims that they made a mistake that cost their customer money and time. Your business should have E&O insurance if it provides services to customers for a fee.
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Best E&O insurance companies
Nearly all commercial insurance companies sell E&O policies. Here are some top options based on our editorial team’s picks for the best business insurance.
NerdWallet recommends getting business insurance quotes from several companies so you can compare costs and coverage details.
Ergo Next Insurance
If you need coverage quickly, you may be able to buy it from Ergo Next in a matter of minutes. And you may be able to get a discount if you buy other policies through the company. However, you can’t buy retroactive coverage online. Read NerdWallet’s review of Ergo Next Insurance.
The Hartford
If you need E&O coverage and a business owner’s policy, consider buying both from The Hartford. It lets you get them simultaneously. You can get an E&O insurance quote from The Hartford online, but you may have to talk to someone on the phone to complete your purchase. Read NerdWallet’s review of The Hartford business insurance.
Hiscox
E&O insurance policies from Hiscox cover work done all over the world, as long as the claim is filed in the U.S. or Canada. Retroactive coverage, which protects your business against claims arising from the period before you bought your policy, may also be available. You’d need to have had insurance from a different provider at the time of the incident to be potentially eligible. Read NerdWallet’s review of Hiscox business insurance.
Travelers
Travelers sells policies via independent agents. That means those agents can suggest insurers besides Travelers that better meet your needs. So, if you want professional help, an independent Travelers agent is a great start. Travelers offers coverage tailored to a variety of industries, from accounting to architecture to investment companies. Read NerdWallet's review of Travelers business insurance.
What is errors and omissions insurance?
E&O insurance is coverage for when a client accuses you of errors, oversights or other mistakes that cost them money. Another name for it is professional liability insurance.
Liability insurance protects your business in case it is sued. E&O insurance can cover those legal costs whether or not a lawsuit has merit. It can also pay for settlements, judgements and other damages.
How E&O insurance works
E&O insurance protects your business finances if you're accused of errors or oversights, failure to deliver a service, breach of contract, professional negligence or failure to meet a standard of care.
These policies generally pay out to cover:
- Legal and court costs. This includes attorney fees to deal with a covered claim, which you'll owe whether or not the legal system finds you at fault.
- Settlements or judgments owed. If the business owner is found to be at fault, errors and omissions insurance can help with these payments.
- Damages and expenses. Your business might have to pay these if it infringes on someone else’s copyright, for instance.
Optional coverages in E&O policies
E&O policies sometimes cover the following scenarios, but they aren’t standard.
- Pre-claims assistance. Some E&O insurance policies will pay out to help you resolve a client issue before it develops into a claim.
- Regulatory or disciplinary proceedings. This covers you if you have to defend yourself to a different organization, like a regulatory body or licensing board.
This protection might cost extra. But if you want it, working with an independent agent is your best bet. That way, you can ask detailed questions to make sure a policy meets your needs.
Look out for a “hammer clause”
If your E&O insurance policy has a hammer clause, the insurance company can insist that you take a settlement offer. Otherwise, you’ll have to fight the case on your own dime.
Sometimes settling a claim is cheaper than going to court. If you’re sued, your insurance company’s lawyer might try to negotiate a settlement. Your policy will pay out to cover it if you accept.
But you might worry how settling a case will look to your customers — even if you don’t officially have to admit fault.
If you have a hammer clause and you decide not to take a settlement, you may have to pay for some or all of the cost of fighting your case. And if you have to pay a judgement later, you’ll be on the hook for that too.
What doesn’t E&O insurance cover?
E&O insurance does not cover illegal acts or purposeful wrongdoing. If the legal system finds that you or an employee did harm on purpose, E&O insurance may not protect you.
Beyond that, many businesses will need policies besides E&O for additional risks. Here are some common ones:
| Risk | Coverage you'll need instead |
|---|---|
| Bodily injury caused by your business or employees | |
| Property damage caused by your business or employees | |
| Data breaches | |
| Employee injuries or illness caused by their work | |
| Discrimination or harassment claims from employees |
If you charge customers for professional services, you should have E&O or professional liability insurance.
Those professions include:
- Accounting.
- Architecture.
- Financial and investment advising.
- Insurance.
- IT consulting.
- Real estate.
Some states or licensing boards require professionals to carry E&O insurance.For example, real estate agents in Tennessee and Rhode Island must have E&O policies to be licensed.
Even if your job doesn’t require E&O insurance, clients may ask for proof that you have it.
Save up to 30% on business insurance
NerdWallet Small Business helps you get real-time quotes from 30+ insurers, and instant access to your Certificate of Insurance (COI) through our partner, Coverdash.
How much does errors and omissions insurance cost?
The median E&O insurance policy costs $61 per month, according to online insurance brokerage Insureon.
That said, the cost of E&O insurance can vary widely depending on:
- Whether you’re in a high-risk industry where lawsuits are more common.
- How much coverage you want.
- Whether there's a history of claims against your business.
- Where you do business.
- How many employees you have.
For more nuance, online brokerage Coverdash shared pricing data with NerdWallet in 2025. For businesses with less than $1 million in annual revenue, policies bought through Coverdash fell into these ranges:
- Professional, scientific and technical services: $800-$3,500 per year ($67-$292 per month)
- Technology: $1,300-$2,400 per year ($108-$200 per month).
- Construction (contractors E&O insurance): $1,200-$5,000 per year ($100-$417 per month).
When should you buy E&O insurance?
As soon as you start serving clients for a fee, you should look for E&O insurance. That way, you’re ready in case a claim is filed.
In general, errors and omissions insurance policies are claims-made policies. That means you need coverage in place when a claim is made. Otherwise, the insurer might not cover it.
Already operating? Look for “prior acts coverage.” Insurers can make E&O policies retroactive to a specific date. That means they’ll cover claims of alleged mistakes dating back to that point.
How much E&O coverage do you need?
The amount of E&O coverage you need will depend on:
- Your industry.
- What kinds of clients you serve.
- The size of your company.
Check with your professional association or licensing body for guidance. But a good baseline is to have enough coverage to protect yourself against an unusual year. If you work at a small firm that has never been sued, for instance, carry at least enough to protect yourself against one lawsuit per year.
How to read policy limits
In general, policy limits have two numbers. For example: “1 million / $2 million.”
The first number is the maximum amount your policy will pay out to cover a single claim. The second number is the total amount the company will pay out during the policy period (typically one year).
For most E&O policies, the limit applies to the cost of your legal defense as well as any settlements or judgments you owe.
Let’s say your legal defense is $100,000. A policy with a $1 million limit per claim would have $900,000 left for settlement or judgement costs. If those expenses were $1 million, you’d owe $100,000 out of pocket. This is called “defense within limits.”
You might have the option to buy a “defense outside the limits policy.” This applies your limit solely to a settlement or judgement. So, in our example, your $1 million policy would fully cover the $1 million settlement. The insurance company then pays for your entire legal defense — regardless of how much it costs. These policies are usually more expensive.
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- 1. Insureon. Errors and Omissions Insurance. Accessed Jan 23, 2026.
Methodology
Business insurance ratings methodology
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These ratings are a guide, but insurance policy details and prices can vary widely from business to business and provider to provider. We encourage you to shop around and compare several insurance quotes.
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Insurer complaints methodology
NerdWallet examined complaints received by state insurance regulators and reported to the National Association of Insurance Commissioners in 2018-2021.
To assess how insurers compare to one another, the NAIC calculates a complaint index each year for each subsidiary, measuring its share of total complaints relative to its size, or share of total premiums in the industry. To evaluate a company’s complaint history, NerdWallet calculated a similar index for each insurer, weighted by market shares of each subsidiary, over the three-year period.
Our star ratings consider ratios for both general liability insurance and commercial property insurance. When an insurer sells policies that are underwritten by several different insurance companies, we consider the NAIC complaint ratios of all the underwriters.
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