What is a common feature of errors and omissions insurance?

Errors and omissions insurance, often referred to as E&O insurance, is designed to protect professionals and businesses against claims of negligence, mistakes, or inadequate work in the performance of their professional duties. A key aspect of this type of insurance is its focus on providing coverage in the event of lawsuits stemming from accusations of professional negligence.

When clients allege that a service provider did not perform their duties to the standard expected, resulting in financial loss or other damages, E&O insurance can help cover legal fees, settlements, and judgments. This protection is critical for professionals such as doctors, lawyers, consultants, and insurance agents who may face allegations of errors or omissions in their services.

In contrast, some features of other options can help clarify why they do not accurately represent the main characteristic of E&O insurance. For instance, while it's true that E&O may not cover fraudulent actions, this is not a defining feature of the policy but rather a limitation commonly seen in many insurance products. Additionally, the coverage provided by E&O insurance is not restricted solely to physical damages; it encompasses economic losses and reputational harm arising from professional errors. Lastly, while obtaining E&O insurance may be a best practice or a contractual requirement for certain professionals, it is not universally mandated for all