Errors and omissions (E&O) insurance in Louisiana

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 alongside 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 situations where tech professionals may benefit from errors and omissions coverage include:

• An IT consultant recommends insecure software that leads to a data breach on a client's system.
• A cloud computing provider 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.

Businesses that provide professional services carry E&O insurance to cover financial losses in case a client isn't satisfied with their work.

In Louisiana, notaries public must carry a $50,000 notary bond to provide services. An E&O policy is no longer accepted in place of the bond, but is still highly recommended.

Examples of situations where professionals may benefit from errors and omissions coverage 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.

When a construction company makes a mistake, the results can be devastating. That's why E&O insurance is common in construction. Here, you're more likely to see it called professional liability coverage.

Examples of situations where construction professionals may benefit from errors and omissions coverage include:

• An electrician installs faulty wiring, which causes a fire that damages a client's home.
• A painter 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.

State laws sometimes require physicians, especially those with admitting privileges, to carry medical malpractice insurance.

In Louisiana, doctors are required to carry $100,000 in malpractice coverage in order to participate in the state's Patient's Compensation Fund (PCF). Most doctors choose this coverage because failing to carry it exposes them to serious liability.

Other healthcare professionals, such as nurse practitioners and certified nursing assistants, often need this coverage to work at hospitals and other healthcare facilities and to participate in health networks, though Louisiana does not require them to carry it.

Examples of situations where healthcare professionals may benefit from errors and omissions coverage include:

• A registered nurse accidentally gives the wrong dose of medication to a patient, who suffers an adverse reaction.
• A home health aide 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 in both the insurance and real estate industries rely on errors and omissions insurance, partly because their work can significantly affect clients' finances.

States also sometimes mandate coverage. Louisiana requires real estate professionals to carry $100,000 per occurrence and $300,000 aggregate coverage through private insurance or the Rice Insurance Services Center (RISC).

Louisiana also requires home inspectors to carry $300,000 in E&O coverage with a $5,000 maximum deductible, and $300,000 in general liability insurance. Home inspectors must also file their proof of coverage with the Louisiana State Board of Home Inspectors (LSBHI).

• A real estate agent 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 agent fails to protect a client against risks they thought they were covered for, but the client doesn't find out until a flood swamps their property.
• A claims adjuster is sued for denying a valid claim because they accidentally looked at a neighboring property instead of the policyholder's home.

In Louisiana, attorneys are not required to carry malpractice coverage or inform clients if they don't have it.

Malpractice insurance is a crucial part of working for a law firm and proving that your business is reliable, even if it's not required.

Examples of situations where legal professionals may benefit from errors and omissions coverage include:

• A law firm misses a deadline to submit paperwork to the court on behalf of its client.
• An attorney fails to obtain a client's consent before making an important decision for them.
• A legal assistant misplaces a key document that was needed for a client's case.

General liability insurance typically doesn't include errors and omissions coverage, though some industries allow you to buy both coverages together.

These two policies protect against different risks, which is why small business owners often carry both.

• 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 covers legal costs when your business is accused of a negligent act that financially harms a client. For medical malpractice insurance, this can extend to bodily injuries as well, since 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.