Business owners and managers often believe that E&O coverage is the same as directors and officers policies. Although at first glance the may seem similar, they apply to different circumstances. In some instances, both policies may be unnecessary. However, in many cases, a package that contains both may be necessary to prevent coverage gaps.
Errors and omissions insurance addresses a company’s products and services. It protects individuals and businesses that make educated recommendations, design solutions or give advice. Protection may be needed when there is an error in judgment or when something that should be done isn’t.
D&O policies provide insurance for negligence, omissions or misleading statements from directors and company officers that result in claims against them. Directors and officers policy coverage can reimburse the business when it indemnifies those individuals. Policies may also cover the business as a whole when it is named in a lawsuit.
E&O coverage is not a one size fits all type of policy. Insurance companies can help business owners and managers evaluate risk and make recommendations regarding deductibles and forms of coverage. An experienced insurer can work with you to ensure exposure to errors, employee rights violations, fraud, omissions and misstatements is minimal. One or both policies may be appropriate, depending on industry and profession.