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We all make mistakes but some are costlier than others. That’s where a professional liability insurance policy can save the day.

What kind of mistakes are we talking about?

Well, imagine a real estate owner who gets dragged into court for allowing their property to fall into disrepair.

Or how about the landlord who refused to rent to an individual based on their handicap?

We all make mistakes but some are costlier than others. That’s where a professional liability policy, or errors and omissions insurance, can save the day.

Or the property manager who is sued for failing to keep adequate records of interest owed on renters’ deposit funds?

Every one of these instances has the potential to deliver a serious if not crippling financial blow, one where only one kind of insurance policy would be of any use: Errors and Omissions coverage.

Also known as professional indemnity or, if we’re talking about doctors and dentists, malpractice insurance, this is the line of insurance that protects you against lawsuits claiming negligence, omissions (mistakes), misrepresentation, and more.

Commercial real estate property owners and managers (and medical professionals) aren’t alone in needing E&O coverage.

Real estate agents, architects, engineers, lawyers, accountants, IT professionals, business consultants, anyone who gives advice or provides a professional service needs it.

What does Errors and Omissions Insurance Cover?

Simply stated, an E&O policy will help you when you make a mistake that impacts a client. If you’re accused of making a mistake or of professional negligence, this is the policy that you’ll want.

E&O also will cover losses caused by unforeseen events that can cause you or your business to miss important deadline or leave you unable to fulfill a contract.

An E&O includes defense costs, too, so that you can pay the lawyers to defend you in court.

A better E&O policy will also help pay a settlement in libel, slander and copyright infringement suits.

The more robust E&O policy will also reimburse you for the cost of sanctions imposed in disciplinary actions, including those related to OSHA fines.

Who’s Covered by an E&O Policy?

Professional Liability protects you and your business. These policies will also pay claims made against employees and even a spouse if they work in the business.

Note that professional liability insurance is what’s known as a claims-made policy. That means the policy needs to be active at the time during which the situation that led to the claim occurred and at the time you reported the claim to the insurer.

It’s also important to remember that professional liability policies have exclusions, including, reasonably enough, illegal acts or intentional harm to a client that a professional knowingly committed.

How Much Does E&O Cost?

The cost of errors and omissions insurance is based on a number of factors such as:

  • The size of the business and number of employees;
  • revenue;
  • industry and type of risks you face;
  • location;
  • Claims history;
  • E&O coverage limits.

The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the nation. For more information about business insurance coverage, contact us online or call 480-730-4920.


This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.

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