E&O for Small Business: Protecting Against Professional Mistakes and Negligence

**Errors and Omissions (E&O)**, or professional liability insurance, is not just for doctors and lawyers. Every small business that provides advice, consulting, or professional service for a fee requires it. **Small Business E&O** protects the company against lawsuits alleging financial loss to a client due to an error in the service provided, negligence, or an omission.

E&O Closes the General Liability Gap

While **General Liability Insurance** (Article 7) covers physical harm (slips, trips, property damage), it does *not* cover financial or economic damage caused by bad advice or a mistake in service. E&O addresses this critical exposure:

**Example 1 (Consultant):** You advise a client on a marketing strategy that fails, costing them $50,000. They sue for breach of contract and negligence.
**Example 2 (Web Designer):** Your new client website goes down during a major sales event due to your coding error, costing them lost revenue. They sue.

The Defense Cost Protection

The most valuable component of **Errors and Omissions** coverage is the defense cost. Even if the lawsuit is baseless, defending it can cost tens of thousands of dollars. E&O pays for the legal fees, court costs, and settlements/judgments, up to the policy limit.

Contractual Requirement: Many medium-to-large clients will refuse to hire a vendor or consultant without proof of adequate **Small Business E&O** coverage, making it a business prerequisite.

For consultants, freelancers, and small professional service firms, **E&O Insurance** is essential for protecting business assets against the financial risk inherent in giving advice.