2014

Get instant
small business insurance quotes

What Is the Cost of Errors and Omissions Insurance for a Small Business?

Errors and Omissions Insurance (also known as Professional Liability Insurance) protects small businesses from lawsuits alleging that their advice or work caused financial loss. Technology firms have a particular need for E&O insurance for two reasons: first, clients often misunderstand the details of a proposed project; and second, laws often lag behind technological developments, meaning that disputes need to be settled in court.

What Does Errors & Omissions Insurance Cover?

Errors and Omissions Insurance kicks in when a client alleges in a lawsuit that your company's mistakes or negligence caused financial loss or damage. E&O Insurance covers:

  • The legal fees needed to hire a lawyer and defend your case in court
  • Any settlements, fees, or judgments for which you are found liable

As with all types of business liability insurance, the cost of E&O Insurance will depend on a number of factors, including what services you offer and where your business is located. The following sample E&O quotes, however, offer a ballpark idea of what you can expect.

Important note: Most E & O policies operate on a "claims made" basis. This means that your policy must be in force at the time an incident takes place as well as at the time when a lawsuit is initiated against you. If these two conditions are not met, you may not be able to collect benefits.

Sample Errors and Omissions Insurance Quote: Small Consulting Company

For these sample quotes, we define a "small" consulting company as one that:

  • Employs 0 – 2 full-time staff members
  • Employs 0 – 10 programmers
  • Brings in $250,000 – $1 million in annual revenue

In addition to these factors, the cost of E&O Insurance for your company will depend on the specific kind of work you do, where you operate, how many people you employ, and more.

Sample annual premium: $2,500 – $4,500

Sample deductible: $5,000

Sample coverage limit (per occurrence): $1 million

Sample coverage limit (annual aggregate): $1 million

The policies used to generate these sample quotes include unauthorized access coverage and malicious code coverage but do NOT include coverage for intellectual property incidents.

Sample Errors & Omissions Insurance Quote: Independent Contractor / Web Designer

For these sample E&O Insurance quotes, we consider an independent contractor or web designer to be a sole proprietor who brings in between $0 and $150,000 in annual revenue. In addition to revenue, the factors that affect the cost of your policy include the location of your business, the kind of work you do, and the number of employees you have.

Sample annual premium: $1,000 – $1,500

Sample coverage limit (per occurrence): $1 million

Sample coverage limit (annual aggregate): $1 million

The policies used to generate these quotes do NOT include unauthorized access or malicious code coverage. You may need this type of coverage if you offer security services such as firewall and antivirus application services. Including such protections in your policy might increase your premium by about 5%.

Further, this quote does NOT include intellectual property liability coverage.

Sample Errors and Omissions Insurance Quote: Large Consulting Company

For these sample quotes, we define a "large" consulting company as one that:

  • Employs 6 – 10 staff members
  • Employs 10 – 50 programmers
  • Earns $3 million – $10 million in annual revenue

In addition to these, other factors will also impact the amount of money a large consulting company can expect to pay for Errors & Omissions Insurance.

Sample annual premium: $14,127

Sample deductible: $5,000

Sample coverage limit (per occurrence): $1 million

Sample coverage limit (annual aggregate): $1 million

The policy used to generate these samples includes coverage for unauthorized access coverage and malicious code coverage but does NOT include coverage for intellectual property liability.

It's also important to note that this policy includes a minimum earned premium of 30%, meaning that a business must pay at least 30% of the annual premium even if it decides to cancel the policy shortly after putting it in force.

Receive Free Errors & Omissions Insurance Quotes for Your Business

When you're ready to find out what an Errors & Omissions Insurance policy will cost for your business, simply fill out our online application form (the process should take about 15 minutes). Once you've finished, one of our expert agents will send free E&O quotes to your email inbox so you can peruse them at your own pace.

Your agent will be on hand to answer any questions you have and help you choose a policy that makes sense for your budget and your coverage needs.

Contract Decoder

Figure out which insurance you need based on the language in your contracts.

Policy Calculator

Learn your risks, how insurance protects you, and what a typical policy costs.

Job Finder

Need Work?
Find tech projects by zip code.