Frequently Asked Questions About E&O Insurance

What is the difference between General Liability and Errors and Omissions (E&O) insurance?

General Liability covers physical accidents, such as a client slipping and falling in your office or an employee accidentally damaging a customer’s physical property. Errors and Omissions (E&O), also known as Professional Liability, covers non-physical, purely financial losses resulting from your professional advice, services, or mistakes. For example, if a consultant gives advice that causes a client to lose money, or a real estate agent misses a critical disclosure, it is covered by E&O, not General Liability.

Do independent contractors in PA and MD need E&O insurance?

Yes. Many independent contractors and freelancers mistakenly believe that their client's corporate insurance policy will protect them. In reality, if a project goes wrong and causes a major financial loss, the client's insurance company or legal team can sue you individually to recoup their losses. Furthermore, most commercial contracts in Pennsylvania and Maryland explicitly require independent contractors to provide a Certificate of Insurance (COI) proving they carry their own E&O policy before starting work.

What does "Claims-Made" mean in an E&O policy?

Almost all Errors and Omissions policies are written on a claims-made basis. This means that for a claim to be covered, both the alleged mistake and the actual lawsuit must happen while the policy is active. If you cancel your policy and a client sues you a month later for work you did last year, there is no coverage. To protect against past work, you must maintain continuous coverage or purchase a "tail" endorsement when closing or selling a practice.

Does E&O insurance cover intentional fraud or dishonest acts?

No. Errors and Omissions insurance is strictly designed to protect against honest mistakes, oversights, misunderstandings, and unintentional negligence. It explicitly excludes coverage for criminal acts, deliberate fraud, dishonest business practices, or intentional misrepresentations made to a client.

What determines the right E&O coverage for my business?

The right E&O policy depends on your specific industry, the types of contracts you sign, your annual revenue, and your claims history — a bookkeeping service carries a very different risk profile than a structural engineering firm. Kelly Glass Insurance works directly with regional underwriters to compare options and build a policy that reflects your actual professional risk, not a generic template.