Ambitious companies take bold bets to grow. Whether you’re delivering software, managing sensitive data, or providing professional services, the work you do carries weight — and the risks are real. A service interruption, a missed deadline, or an overlooked error can lead to disputes that quickly escalate into costly claims. That’s where Errors and Omissions (E&O) Insurance comes in. It’s designed to protect businesses from the financial and legal fallout when the work you deliver doesn’t meet expectations.

This guide explains what E&O Insurance is, how it works, and the protections it offers. We’ll cover what’s typically included (and excluded), when businesses should consider it, and how E&O fits into a broader risk management strategy. With practical examples and clear takeaways, the goal is simple: help leaders understand how the right coverage can safeguard their business while supporting their growth.

What is Errors & Omissions (E&O) Insurance?

Errors & Omissions Insurance, also known as professional liability insurance, protects businesses when a client or customer claims that your product or service caused them financial harm. These claims can stem from mistakes, missed deadlines, system failures, or even disputes over whether a company delivered on its promises.

At its core, E&O coverage is designed to cover the costs of defending your business and, if necessary, resolving disputes through a settlement or court award. This typically includes attorney fees, court costs, and damages up to your policy limits.

For example, an accounting firm might face a lawsuit if a reporting error leads to financial losses for a client. A telehealth provider could be accused of service interruptions that prevent patients from receiving timely care. A consulting firm might be challenged if a project falls short of agreed-upon outcomes. In each case, E&O coverage can step in to help offset legal expenses and protect the business from significant financial strain.

What does E&O insurance cover?

E&O policies are designed to protect businesses when clients or customers claim that the work delivered caused them financial loss. Depending on the policy, coverage may include:

• Legal defense costs such as attorney fees, court expenses, and expert witnesses
• Settlements or court-awarded damages if your business is found liable
• Claims of negligence or failure to perform professional duties as expected
• Breach of contractual obligations tied to service delivery or performance standards
• Misrepresentation of services or capabilities that lead to client losses
• Failure of a product or service to meet promised specifications
• Errors by third-party vendors or contractors, if covered by the policy

In short, E&O coverage steps in when your company is accused of making a mistake — whether that’s a professional error, a missed obligation, or a breakdown in service — and helps protect against the financial consequences.

Real scenarios where E&O steps in

Consider this scenario: A small fintech firm integrates a feature from your payments platform into its mobile app. Due to a bug introduced during a version update, the feature miscalculates transaction fees. End users are overcharged, and the fintech loses both revenue and customer trust. They file a lawsuit against your company, citing negligence and product failure. Your tech E&O Insurance could help pay for legal defense and any resulting financial resolution.

In another example, your real estate investment platform lists an opportunity to fund a new development in Salt Lake City. You include a target return rate in your messaging and clarify that it's a projection — not a guarantee. Despite the disclosure, two investors send a demand letter alleging negligent investment advice and request a full return of their investment. With an endorsement for financial and investment activities on your E&O policy, you may be able to cover the legal fees to investigate and respond. In the end, you deny liability, and the investors choose not to pursue the claim.

These examples show how even minor errors in delivery can trigger major consequences for your customers and your company. E&O Insurance helps manage those outcomes.

What E&O Insurance doesn't cover?

Errors & Omissions Insurance does not cover every risk. Some common exclusions include:

• Claims related to intentional misconduct
• Employee injury or workers' compensation matters
• Physical property damage
• Cyberattacks or data breaches
• Intellectual property disputes (unless endorsed)

To manage these exposures, you may need different policies. For example, a Cyber Insurance policy can help cover breach-related losses. Employment Practices Liability Insurance (EPLI) can help with claims of wrongful termination or harassment. Directors and Officers (D&O) Insurance can protect company leaders from governance-related claims.

Understanding what tech E&O coverage does and doesn't cover helps you build a comprehensive risk strategy.

What does E&O insurance cost?‍

The cost of Tech E&O insurance isn’t one-size-fits-all. Premiums are shaped by your company’s profile, industry, and approach to risk. While early-stage startups may pay a few thousand dollars annually, more mature or high-risk companies often see higher premiums. Key factors include:

• Company size & revenue: Larger operations with more clients, contracts, and exposure typically face higher premiums.
• Industry & services: Companies in fintech, healthtech, or AI often pay more because mistakes can lead to outsized financial or regulatory consequences.
• Claims history: A clean record can lower costs, while a history of claims may increase them. Strong corrective actions can help offset this.
• Coverage limits & deductibles: Higher limits mean broader protection but come with higher premiums, while higher deductibles reduce premiums but increase out-of-pocket costs if a claim arises.
• Geography: Businesses in regions with higher litigation rates often face higher premiums; global operations add complexity and cost.
• Risk management practices: Demonstrating robust quality controls, compliance protocols, and cybersecurity measures can lead to lower premiums.

Vouch Specialty Insurance Services, LLC (CA License #6004944) is a licensed insurance producer in states where it conducts business. A complete list of state licenses is available at vouch.us/legal/licenses. Insurance products are underwritten by various insurance carriers, not by Vouch. This material is for informational purposes only and does not create a binding contract or alter policy terms. Coverage availability, terms, and conditions vary by state and are subject to underwriting review and approval.