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 South Dakota, Errors and Omissions (E&O) insurance is a type of professional liability insurance that safeguards businesses and their employees from claims of negligence or substandard work by clients or customers. This insurance is crucial for professionals who provide services or advice, as it covers legal costs and settlements if they are sued for making a mistake or failing to perform their duties, even if no actual error was made. E&O insurance is particularly relevant for industries where the risk of being accused of professional negligence is higher, such as architecture, engineering, construction, IT, real estate, consulting, marketing, health and beauty, fitness, retail, and therapy. While South Dakota state statutes do not specifically mandate E&O insurance for all service providers, certain professions may be required by law or industry standards to carry this insurance. Additionally, clients may require proof of E&O insurance before engaging in business. It's important for professionals in South Dakota to consider E&O insurance as part of their risk management strategy to protect against potential legal actions arising from their professional services.