What is the primary purpose of Errors and Omissions Insurance?

Errors and Omissions Insurance (E&O Insurance) serves as crucial protection for professionals by providing coverage against legal claims resulting from mistakes, negligent acts, or oversight in the services they provide. This type of insurance is particularly important for professionals such as real estate agents, insurance brokers, consultants, and attorneys, who may face lawsuits from clients who believe that they have suffered financial losses due to the professional's errors or substandard work.

By securing E&O Insurance, professionals can safeguard themselves from the financial burdens associated with defending against these claims, which can include legal fees, settlements, and court costs. This protection not only supports individuals in navigating potential legal challenges but also reinforces their credibility and reliability in the marketplace, knowing that they have taken steps to mitigate risks associated with their profession. Thus, the primary purpose of this insurance is indeed to protect against legal claims due to mistakes, making it an essential component of risk management for service-oriented businesses.