Errors and omissions (E&O) insurance in Pennsylvania

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 in Pennsylvania may require E&O 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 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.

Although notaries public aren't required to carry errors and omissions insurance, they need to have a $25,000 notary bond to fulfill state law requirements.

Examples of situations where professional service providers in Pennsylvania may require E&O 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 in Pennsylvania may require E&O 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, forcing a store 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 Pennsylvania, doctors, hospitals, and healthcare providers must carry malpractice coverage with a $1 million per occurrence and $3 million aggregate limit, according to the Mcare Act.

Healthcare professionals often need this coverage to work at hospitals and other healthcare facilities, and to participate in health networks.

Examples of situations where Pennsylvania healthcare workers may 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 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, though Pennsylvania does not require it. Individual brokerages within Pennsylvania may require their agents to carry this coverage in order to practice there.

Examples of situations where Pennsylvania agents and brokers may need malpractice coverage include:

• 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 they didn't find out until a flood swamped 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.

Home inspectors are required to carry general liability insurance as well as a $100,000 per-occurrence and $500,000 aggregate limit E&O policy in order to operate in Pennsylvania.

In Pennsylvania, lawyers are legally required to inform clients if they don't have at least $100,000 per occurrence / $300,000 aggregate in legal malpractice insurance.

Malpractice insurance is a crucial part of working for a law firm and proving that your business is reliable.

Examples of situations where Pennsylvania legal professionals may need malpractice coverage include:

• A law firm misses a deadline for submitting paperwork to the court on behalf of their client.
• An attorney 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.

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 if 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.