While most insurance is attached to a physical object or person, errors and omissions insurance is a little more abstract. Nonetheless, it’s very important that service-based businesses invest in E&O.


Errors & omissions insurance (also known as E&O coverage) is a specific type of liability insurance. E&O protects you from harm that might be caused by your services. It is usually used by professionals, private practices, and any other business that provides a service to clients for a fee. If you or your employees are accused of negligence, errors, or omissions that have caused damage to another business or person, your E&O insurance will protect you.

In combination with other insurance policies (such as a general liability policy and professional liability insurance) errors and omissions coverage can protect your business from financial and legal threats. When you have the full protection of a business insurance plan that includes E&O, even a major financial loss won’t necessarily shut you down. An E&O claim can also include all defense costs for any legal issues, so you won’t have to pay out of pocket should a lawsuit arise.


To learn more about how E&O Insurance works, let’s look at an example:

A computer store called TekMore is having a laptop sale. They hire a company called MarkIt to promote the sale on a set of mail-out flyers. A MarkIt employee accidentally makes a mistake. He advertises one laptop for $790.00 instead of $990.00. TekMore is forced to sell the laptop for the advertised price to all the customers who bring the flyer in. That leaves them on the hook for a lot of money. In turn, TekMore could sue MarkIt for the mistake.

This example shows just how costly a single error can be for a business. If MarkIt does not have E&O coverage and is sued by TekMore, they will have to pay out of pocket for the mistake. This could cut into revenues, or worse, force the business to shut down entirely.

However, a solid E&O policy could save MarkIt from a big payout in this case. It would also offer MarkIt coverage for associated legal fees and other costs to the business. One important aspect of E&O insurance is that it covers the employees of a business, as well as the business owner and the business itself.


Not every business in Alberta needs E&O coverage. E&O coverage is mainly for service-based businesses. If you give advice, represent someone else, or provide solutions, designs, or recommendations to clients for a fee, you have a service-based business. Some typical examples of service-based businesses that need E&O coverage include:

  • Accountants
  • Mortgage brokers
  • Marketing agencies
  • Engineering firms
  • Architectural firms
  • IT technicians
  • Financial services & consultants
  • Management consultants

A commercial insurance company will help you determine whether you need E&O insurance, but it’s important to understand what your coverage entails. If you aren’t sure whether you need errors and omissions insurance, Cornerstone’s experienced commercial brokers can help you learn more about your risks so you can make an informed decision. We’ll also make sure your other business insurance coverage is complete by performing a full risk management assessment.


At Cornerstone Insurance, we offer solid protection and sound advice for every business client we serve. That’s why we’re a top choice for business owners in Alberta! You’ll receive a free quotes and professional services from a qualified insurance broker. If you need help with your E&O insurance, general liability insurance, or any other commercial insurance policy in Alberta, please contact us today.

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