What does errors and omissions insurance protect against?

Errors and omissions insurance specifically provides protection for professionals against claims made by clients for inadequate work or negligent actions. This type of insurance is often essential for service-oriented businesses, such as consultants, accountants, and insurance agents, where the risk of a client alleging that the service provided was substandard is prevalent. It covers legal defense costs and settlement expenses that may arise from such claims, which can be financially devastating without insurance.

The nature of this coverage directly relates to the risks professionals face in their work, ensuring that they can manage claims that question the quality of their services. The other options refer to different types of risks and liabilities that are not covered under errors and omissions insurance, such as competitor claims or property damage, which fall under other types of liability insurance or commercial policies.