In the business world, making a mistake can make you the target of a lawsuit, especially when another party relies on the service or product and gets hurt by the mistake. This sort of situation typically happens in professional service agreements involving doctors, lawyers, accountants, engineers, brokers, advisors and other professional services. So, for such a business to survive a mistake rather than go bankrupt in a retaliatory lawsuit, insurance is available to help prevent unforeseen results for an honest error or business misjudgment. Errors & Omissions Insurance is a necessary cost for almost all professional businesses, particularly those located in states where the laws make it easier to sue businesses for mistakes made. Despite the burden being on the customer to prove a harm occurred, a business can still pay an enormous cost just going through the legal defense and getting vindicated in court. Having and E&O policy can provide a cap on such expenses which would otherwise bankrupt a professional small business. What Exactly is Error Insurance? Error insurance, also known as errors and omissions (E&O) insurance policies, provide specific professional liability coverage to a business that provides professional intellectual services or products. As noted above, these types of businesses can range from software providers to engineers producing peer reviews on structure analyses. In short, it's an insurance protection if someone's intellectual service includes a mistake that is found later, after the service has been concluded and paid for. As an insurance agreement, the policy agrees to provide financial assistance to a business if and when it gets sued for failing to do what it promised it would perform for a customer. Many times, such actions a relied upon because the customer cannot perform the function itself and needs a qualified service. Additionally, the product can typically involve very important decisions that, if they go bad, can be detrimental for the customer. So accuracy is critical and important. However, there's a difference between accuracy and perceived effectiveness. If disagreements on professional performance were just about being accurate, there would be very few lawsuits against such businesses. Typically, the disgruntled customer is upset at a loss which is blamed on the professional as a result of perceived ability to avoid a loss using such a service. The customer then turns on the service provider because they didn't "win" as "promised." What is E&O Insurance?