Errors and omissions insurance—also known as E&O insurance, indemnity insurance, or professional liability insurance—is a form of professional liability insurance designed to protect employers and employees against customers’ or clients’ claims of negligence or inadequate work. It protects your business if you are sued for negligently performing your services—even if you didn’t make a mistake or do anything wrong.
A customer could sue you because you did something you shouldn’t have, or you didn’t do something you should have, in the course of providing professional services.
For example, a freelance writer or consultant who creates marketing and information content for websites might be sued by a client who is sued for copyright infringement or forced to remove the content from their website because it infringes another person’s copyright. An E&O policy might protect the freelance writer or consultant from the claim they were negligent in creating the content that infringes another person’s copyright—paying the cost of defending the case and any settlement or court judgment in the matter, subject to policy limits.
Industries with service providers who often purchase E&O insurance include:
• Architecture and engineering
• Construction
• IT/technology
• Real estate (agents, inspectors, surveyors, appraisers)
• Consulting
• Marketing (graphic designers, web designers, photographers, event planners, promoters)
• Health and beauty
• Fitness (instructors, teachers, trainers)
• Retail
• Therapy
In Texas, Errors and Omissions (E&O) insurance is a form of professional liability insurance that serves to protect businesses and individuals who provide professional services from claims of negligence or inadequate work. This type of insurance is crucial for professionals who could be held liable for errors, omissions, or negligence in the services they provide to clients. E&O insurance covers legal defense costs, settlements, and judgments up to the policy limits. While Texas does not mandate E&O insurance for all service providers, certain professions may be required by law or industry standards to carry it, such as real estate agents and brokers, who are required to maintain E&O insurance as per Texas Occupations Code §1101.204. Professionals in architecture, engineering, IT, consulting, marketing, and other fields often obtain E&O insurance voluntarily to mitigate the financial risks associated with potential lawsuits. It's important for service providers to understand the specific requirements and benefits of E&O insurance in their field and to consult with an attorney to ensure adequate coverage based on their particular business risks.
