Errors and omissions (E&O) insurance in Colorado
Colorado law doesn't require businesses to carry E&O insurance, but you might still need it to sign a contract or get licensed in your field. It provides crucial protection against lawsuits related to your work performance.
What is covered by errors and omissions insurance in Colorado?
Errors and omissions insurance helps pay for legal costs when your Colorado business is sued for professional negligence. That includes a wide range of claims, such as:
- Mistakes and oversights
- Breach of duty
- Missed deadlines
- Late or incomplete work
- Misrepresentation
- Undelivered services
- Budget overruns
If a client files a lawsuit related to the quality of your work, errors and omissions insurance will cover attorney's fees, court costs, settlements, and judgments.
Depending on your profession, you might see this policy called E&O insurance, professional liability insurance, or malpractice insurance. Though the name varies, these policies all provide similar protection.
Though it's not mandated by law in Colorado for all businesses, many professionals and small businesses still need to carry E&O insurance.
Who should purchase errors and omissions insurance in Colorado?
Businesses that provide professional services or advice should have E&O insurance, as their work could directly impact their clients' finances. If a mistake could cost your client money, you should invest in this coverage.
Errors and omissions insurance can also pay for frivolous lawsuits. For instance, an unhappy client could sue your business in an attempt to recover their losses, even if it wasn't your fault. These kinds of lawsuits can still cost a significant amount in legal defense fees.
Other circumstances outside of your control could lead to a lawsuit, such as losing a key member of your staff right before an important deadline. For these reasons and more, a wide range of professionals depend on E&O insurance for financial protection.
Here are the top industries that depend on this policy, along with some situations where they might need it:
Tech companies
Sole proprietors, startups, and corporations in the tech industry rely on E&O insurance to protect against lawsuits from dissatisfied clients.
Tech professionals often buy this coverage together with cyber insurance in a package called technology errors and omissions insurance, or tech E&O. This bundle helps pay for lawsuits related to data breaches and cyberattacks.
Examples of when a tech company might benefit from E&O include:
- An IT consultant recommends insecure software that leads to a data breach on a client's system.
- A cloud computing provider in Denver suffers an unexpected outage that suspends a client's ability to do business.
- A computer repair business fails to fix a client's computer in time for them to complete an important project.
Professional services
Businesses that provide professional services carry E&O insurance to cover financial losses in case a client isn't satisfied with their work.
Examples of when a professional service might benefit from E&O include:
- An event planner fails to book a venue they'd guaranteed for a client's wedding.
- A security guard overlooks a threat and someone vandalizes their client's property.
- A recruiter makes a typo in a job listing and candidates expect a higher salary and different benefits.
Construction contractors
When a construction company makes a mistake, the results can be devastating. That's why E&O insurance is common in the construction industry. Here, you're more likely to see it called professional liability coverage.
Examples of when a construction business might benefit from E&O include:
- An electrician installs faulty wiring, which causes a fire that damages a client's home.
- A painter in Aurora fails to complete a project on time and a store is forced to delay its grand opening.
- A general contractor doesn't comply with building codes, forcing the homeowner to complete a costly renovation on an outbuilding.
Is E&O insurance required by law in Colorado?
Though it's not mandated by law in Colorado, many professionals and small businesses still need to carry E&O insurance to sign contracts, comply with regulations, or work in other states. These businesses include:
Doctors and nurses
State laws sometimes require physicians, especially those with admitting privileges, to carry medical malpractice insurance.
In Colorado, doctors are required to carry $1 million per incident and $3 million aggregate limits of malpractice insurance coverage. Doctors can elect to meet this requirement through maintaining a trust or a letter of credit, but most choose to get coverage through an insurance company.
Healthcare professionals often need this coverage to work at hospitals and other healthcare facilities, and to participate in health networks.
Examples of when healthcare professionals might need malpractice coverage include:
- A registered nurse accidentally gives the wrong dose of medication to a patient, who suffers an adverse reaction.
- A home health aide in Colorado Springs misses an appointment and their client is alone when they suffer a medical crisis.
- A chiropractor makes an improper adjustment that worsens a client's back pain.
Agents and brokers
Agents and brokers in both the insurance and real estate industries rely on errors and omissions insurance, partly because their work can have a big impact on their clients' finances.
Colorado state laws require real estate agents to have E&O coverage in order to practice, but it's not mandated for insurance brokers.
Examples of when agents and brokers might need errors and omissions insurance coverage include:
- A real estate broker makes a mistake in an MLS listing, and the buyer discovers the property was smaller than advertised after they've finalized the purchase.
- An insurance services agent fails to protect a client against risks they thought they were covered for, but the issue isn't discovered until a flood swamps their property.
- A claims adjuster in Lakewood is sued for denying a valid claim because they accidentally looked at a neighboring property instead of the policyholder's home.
Attorneys
In Colorado, lawyers are not required to carry legal malpractice insurance, but if they elect not to, they must disclose their decision to the Colorado Supreme Court, as well as their clients, in writing.
Examples of when lawyers may need legal malpractice insurance include:
- A law firm misses a deadline for submitting paperwork to the court on behalf of their client.
- An attorney in Thornton fails to get consent from a client before making an important decision for them.
- A legal assistant misplaces a key document that was needed for a client's case.
Top professions that need E&O insurance
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How much is E&O insurance in Colorado?
Errors and omissions insurance costs an average of $68 per month for small businesses in Colorado.
The cost of E&O insurance depends on:
- Type of business
- Your location
- Business revenue
- Your policy limits and deductible
- Number of employees
- Claims history
Hear from customers like you who purchased E&O coverage.
How does errors and omissions insurance work in Colorado?
If you're sued in Colorado over a mistake in your professional work, errors and omissions insurance will pay for your legal defense costs. It's an affordable policy for many small businesses, especially those with low risks.
Keep in mind that E&O insurance is a claims-made policy, so it works differently from occurrence-based policies like general liability insurance. With E&O insurance, you must keep your policy active to file a claim. This is true even for incidents that happened while you had coverage, which is why you should think twice before canceling your policy.
Errors and omissions insurance policies cover both legitimate and frivolous lawsuits. A legal battle can be expensive, between your attorney's hourly rate, administrative costs, and the resulting settlement or judgment. E&O insurance will cover all of these expenses, up to the limits on your policy.
When choosing your coverage limits, consider how much a lawsuit could set your business back financially. The deductible should be an amount you can easily afford, as you'll need to pay it before you can collect on a claim.
Are there any exclusions in errors and omissions insurance?
As with other policies, E&O coverage comes with exclusions that depend on your insurance company and the details of your policy. In general, E&O policies won't cover the following:
- Discrimination and abuse
- Criminal acts
- Lawsuits filed by your business
For instance, this policy won't help with legal fees if you decide to sue a client over a contract dispute or other issue. It'll only cover legal defense costs in the event of a lawsuit against your business.
Intentional harm, violations of laws and regulations, and services provided by subsidiaries or organizations not listed on your policy would also not be covered. Discrimination and abuse are typically covered by another policy called employment practices liability insurance (EPLI).
Does general liability insurance include E&O coverage?
General liability insurance does not typically include errors and omissions coverage, though it's possible to buy these coverages together in some industries.
These two policies protect against different kinds of risks, which is why small business owners often carry both types of insurance coverage.
- General liability insurance covers accidents that harm someone outside your business, such as a customer who slips in your office and suffers a concussion, or an incident where an employee drops and breaks a client's laptop. It also covers advertising injuries, such as copyright infringement, libel, and slander.
- Errors and omissions insurance pays for legal costs when your business is accused of a negligent act that harmed a client financially. In the case of medical malpractice insurance, this can extend to bodily injuries as well, as physical health is part of a healthcare provider's professional responsibilities.
General liability claims can happen at any business, especially those that are open to the public. E&O insurance is more specific to businesses that offer professional services or advice, especially in areas where a mistake could cause a client to lose money.
Read more about errors and omissions insurance vs. general liability insurance.
General liability insurance
Business owner’s policy (BOP)
Workers' compensation insurance
Cyber liability insurance
Commercial auto insurance
Both professional liability insurance and errors and omissions (E&O) insurance offer financial protection from client lawsuits over unsatisfactory work. They’re essentially the same types of coverage for mistakes in professional services.
How to get E&O insurance for Colorado businesses
TechInsurance is a trusted insurance expert for small businesses, with extensive knowledge of the IT sector. We help business owners find quotes from top-rated insurance agencies, buy policies, and manage their business insurance online.
Fill out TechInsurance's easy online application to compare free quotes for errors and omissions insurance and other policies from the leading carriers in the nation. Our insurance agents are available to help answer any questions you may have.
Once you find the right policies for your small business, you can begin policy coverage in less than 24 hours and get a certificate of insurance for your small business.
