Errors and omissions insurance—also known as E&O insurance, indemnity insurance, or professional liability insurance—is a form of professional liability insurance designed to protect employers and employees against customers’ or clients’ claims of negligence or inadequate work. It protects your business if you are sued for negligently performing your services—even if you didn’t make a mistake or do anything wrong.

A customer could sue you because you did something you shouldn’t have, or you didn’t do something you should have, in the course of providing professional services.

For example, a freelance writer or consultant who creates marketing and information content for websites might be sued by a client who is sued for copyright infringement or forced to remove the content from their website because it infringes another person’s copyright. An E&O policy might protect the freelance writer or consultant from the claim they were negligent in creating the content that infringes another person’s copyright—paying the cost of defending the case and any settlement or court judgment in the matter, subject to policy limits.

Industries with service providers who often purchase E&O insurance include:

• Architecture and engineering

• Construction

• IT/technology

• Real estate (agents, inspectors, surveyors, appraisers)

• Consulting

• Marketing (graphic designers, web designers, photographers, event planners, promoters)

• Health and beauty

• Fitness (instructors, teachers, trainers)

• Retail

• Therapy

In Michigan, Errors and Omissions (E&O) insurance is a type of professional liability insurance that safeguards businesses and individuals who provide professional services against claims of negligence or substandard work. This insurance is crucial for professionals who could be held liable for mistakes, omissions, or failure to deliver services as expected, even if no actual error was made. E&O insurance typically covers legal defense costs, settlements, and judgments up to the policy limits. While Michigan does not have a specific statute mandating E&O insurance for all service providers, certain professions may be required by law or industry standards to carry such insurance. For instance, real estate professionals, including agents and appraisers, are often required to have E&O insurance as part of their licensing requirements. Similarly, architects and engineers may need to carry E&O insurance to comply with contractual obligations or professional association guidelines. It's important for service providers in various industries, such as IT, consulting, marketing, health and beauty, fitness, and therapy, to consider obtaining E&O insurance to protect against potential legal claims arising from their professional activities.