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Errors and Omissions Insurance
Protect your company against lawsuits for mistakes and oversights.
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How much does errors and omissions insurance cost?

If your business provides professional advice or services, you should look into errors and omissions insurance (E&O), also called professional liability insurance. This policy can help defer the costs of lawsuits, even if you’ve done nothing wrong, and costs about $60 per month.

What do small businesses pay for errors and omissions insurance?

Most tech businesses buy technology errors and omissions insurance (tech E&O), which bundles E&O with cyber liability insurance. Tech E&O insurance costs vary from an average of roughly $730 per year to more than $1,400.

How much do IT businesses pay for errors and omissions insurance?
Compare errors and omissions insurance quotes for your company

Policy limits determine how much E&O coverage costs

The cost of your policy depends on how much E&O/professional liability insurance coverage you buy. Most TechInsurance customers (63%) buy an errors and omissions policy with a $1 million per-occurrence limit and a $1 million aggregate limit.

Which errors and omissions insurance limits do technology companies choose?

If you provide professional services that affect a client’s profits, choosing higher limits could be a smart business decision. It’ll cost more, but also cover more expensive claims.

As you can see in the chart below, there’s a direct correlation between how much you pay and your coverage limits.

Breakdown of costs for different technology errors and omissions policy limits

Other factors that affect E&O insurance costs

Your type of business and its size influence the cost of E&O/professional liability insurance. Your insurance company will also look at:

Whether clients can blame you for financial loss

If your mistake costs a client money, you may have a lawsuit on your hands.

IT consultants, project managers, software developers, and others whose work directly impacts a client’s bottom line are at risk of E&O lawsuits. That means they’ll likely pay more for this insurance policy.

For example, a software developer could miss a bug in a client program. When the bug surfaces and crashes the client’s system for three days, the client could sue to recover lost profits and other costs.

Consultants and others who provide expert advice face similar risks. If your recommendations don’t produce the desired results, you could also be taken to court.

Your cyber risks

The amount of risk determines the cost of errors and omissions insurance that includes cyber liability insurance. For example, cybersecurity companies and businesses with sensitive digital assets pay more for this coverage.

Cyber insurance costs depend on the amount of data and the number of employees who can access it. It’s simple math: more people accessing more data increases the chance of a data breach.

Your policy’s deductible

Choosing a higher deductible is an easy way to save on your premium. Most TechInsurance customers opt for a deductible of $1,000 for E&O insurance.

But make sure to choose a deductible you can easily afford. If you can’t pay it, you can’t collect on a claim.

Your past errors and omissions coverage

Your insurance company will charge more to protect you if you’ve cost them money in the past. That’s why you need to answer questions about liability claims when you apply for this policy.

It’s unfortunate but true, claims on your insurance make your premium go up. The good news is, you can reduce some risks to avoid claims and keep your premium low.

Because errors and omissions insurance is a claims-made policy, you can also pay more to extend coverage to a date in the past. But it’s cheaper to maintain continuous coverage than to stop and restart a policy.

How can you save money on E&O insurance?

It’s easy to save money on your E&O policy without compromising on coverage. For instance, you can:

Pay your premium in full. Your insurance company will ask if you want to pay your premium annually or in monthly installments. The annual premium costs less than paying month by month.

Reduce your risks. It’s unfortunate but true, claims on your insurance make your premium go up. The good news is, you can reduce some risks to avoid claims and keep your premium low.

A good risk management strategy to reduce E&O claims includes:

  • Detailed contracts with clients
  • Clear client communication
  • Prompt resolution of complaints
  • Checking (and double-checking!) your work for errors
  • Strong cybersecurity measures to reduce cyber risks

You can’t eliminate risk. If that were possible, insurance companies would be out of business. But risk management helps you sidestep common pitfalls that lead to insurance claims and higher errors and omissions (professional liability) insurance costs.

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How to compare errors and omissions insurance quotes

Before purchasing errors and omissions insurance (E&O), consider factors such as premium pricing, insurance company ratings, and policy limits.

What do small businesses pay for other policies?

Updated: June 29, 2022