Errors & Omissions Insurance for Entrepreneurs
Protect yourself from client disputes, contract errors, and professional liability claims with comprehensive E&O coverage.
What is E&O Insurance?
Errors & Omissions (E&O) insurance, also called Professional Liability insurance, protects entrepreneurs from claims of negligence, mistakes, or failure to deliver promised services. If a client believes you made an error that cost them money, E&O insurance covers your legal defense and any settlements or judgments.
Why Entrepreneurs Need E&O Insurance
In business, your reputation is everything. One unhappy client can lead to a lawsuit that drains your savings and damages your career. E&O insurance protects you from:
- Client disputes: When expectations don't match reality
- Contract errors: Mistakes in agreements or terms
- Missed deadlines: Failure to deliver on time
- Misrepresentation claims: Allegations of misleading statements
- Negligence accusations: Claims you didn't do your job properly
What E&O Insurance Covers
Typical Coverage Includes:
- ✓ Legal defense costs (even if the claim is groundless)
- ✓ Settlements and judgments up to your policy limit
- ✓ Court costs and attorney fees
- ✓ Expert witness fees
- ✓ Administrative costs of defending claims
Real-World Scenarios
Scenario 1: The Overpromise
A SaaS entrepreneur promises a client that the software integrates with their existing CRM. After closing the deal, the client discovers the integration doesn't exist. They sue for $75,000 in lost productivity and the cost of switching platforms. E&O insurance covers the legal defense ($30,000) and settlement ($45,000).
Scenario 2: The Missed Detail
A real estate agent forgets to disclose a zoning restriction on a commercial property. The buyer later discovers they can't operate their planned business and sues for $200,000. E&O insurance covers the defense and settlement.
Scenario 3: The Contract Error
A financial advisor accidentally enters the wrong renewal terms on a client's insurance policy. When the client files a claim, they discover they're underinsured by $100,000. The client sues the advisor for the difference. E&O insurance steps in.
How Much Does E&O Insurance Cost?
E&O insurance for entrepreneurs typically costs between $500 and $3,000 per year, depending on:
- Your revenue: Higher earnings = higher premiums
- Your industry: Financial services costs more than tech business
- Coverage limits: $1M vs $5M policies
- Claims history: Prior claims increase rates
- Team size: Solo vs team coverage
Industry Insight
Most contracts with enterprise clients require E&O insurance with at least $1M coverage. Without it, you're leaving money on the table and limiting your growth.
What's NOT Covered
E&O insurance doesn't cover everything. Exclusions typically include:
- Intentional wrongdoing or fraud
- Bodily injury or property damage (that's General Liability)
- Employment disputes (that's EPLI)
- Cyber attacks or data breaches (that's Cyber Liability)
- Claims made before your policy started (unless you have prior acts coverage)
Coverage Limits Explained
E&O policies have two limits:
- Per-Claim Limit: Maximum the insurer pays for a single claim (e.g., $1M)
- Aggregate Limit: Maximum for all claims in a policy year (e.g., $2M)
Most entrepreneurs carry $1M/$2M or $2M/$4M limits. High-revenue earners or those in financial services often need $5M or more.
How to Choose the Right Policy
- Check client requirements: Many contracts specify minimum coverage
- Assess your risk: Higher revenue = higher liability exposure
- Choose the right limit: Match your annual revenue as a baseline
- Consider prior acts coverage: Protects against old claims
- Review exclusions: Make sure your specific risks are covered
Who Needs E&O Insurance?
If you're an entrepreneur in any of these fields, you need E&O insurance:
- Real estate agents and brokers
- Financial advisors and insurance agents
- SaaS and tech entrepreneurs
- Solar and renewable energy entrepreneurs
- Merchant services and ISO agents
- Marketing and advertising agencies
- Business consultants and coaches
Get Your E&O Quote Today
Don't wait until you're facing a lawsuit to protect your career. Most E&O policies can be bound within 48 hours, and you'll have peace of mind knowing one mistake won't derail your business.