Errors and Omissions Insurance (E&O)

Definition - What does Errors and Omissions Insurance (E&O) mean?

Errors and omissions (E&O) insurance is a form of liability insurance that protects businesses from losses that can ensue as the result of mistakes made or negligence committed on behalf of the company. These losses would come as the result of lawsuits being filed against the company by clients. E&O usually covers court costs in addition to the primary losses.

Insuranceopedia explains Errors and Omissions Insurance (E&O)

Even top performing companies can occasionally make mistakes. For example, a train manufacturer might use a faulty part in an engine, thereby leading to a train breakdown. This could lead to losses for the client who might then file a suit against the train manufacturer. E&O insurance would be able to cover these losses. It is one type of commercial insurance, among many, that businesses can purchase to reduce their risk exposures.

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