INSURANCE GUIDE
Errors and Omissions Insurance UK
What E&O cover is, who needs it, and how professional indemnity insurance protects against negligence claims in the UK.
TL;DR
- Errors and omissions insurance is the US term for professional indemnity insurance - the products are the same.
- It covers claims that your professional advice, services, or work product caused a client financial loss.
- Claims-made policies cover claims made during the policy period - run-off cover is needed after you stop practising.
- E&O/PI is distinct from public liability - PI covers financial loss claims, PL covers physical injury and property damage.
What Errors and Omissions Insurance Covers
Errors and omissions (E&O) insurance - also called professional indemnity (PI) insurance in the UK - covers legal defence costs and compensation if a client claims that your professional services caused them financial loss. The claim typically arises from an error in your work product, an omission of important information, a missed deadline, incorrect advice, or a failure to meet professional standards. E&O insurance covers both the cost of defending the claim and any damages awarded, up to the policy limit.
Who Needs E&O Insurance
Any professional who provides advice, designs, plans, or specialist services to clients for a fee faces E&O exposure. Common purchasers include: management consultants, IT contractors, financial advisers, architects, engineers, accountants, solicitors, marketing agencies, recruitment consultants, and HR advisers. In some professions - solicitors, financial advisers, architects - professional body membership mandates PI/E&O cover. In others, it is a commercial necessity driven by client contract requirements.
Claims-Made Policy Structure
E&O and PI policies in the UK are almost always written on a claims-made basis: the policy in force when the claim is made responds, not the policy in force when the professional services were delivered. This has two important implications. First, you must maintain continuous cover - a gap in cover means claims made during the gap are uninsured. Second, you need run-off cover if you cease trading or change insurers - run-off extends the claims window for claims arising from past work after the policy is no longer being renewed.
E&O vs Public Liability
The distinction between E&O/PI and public liability is important. E&O/PI covers financial loss claims - a client losing money because of your professional error. Public liability covers physical injury and property damage claims - a client injured at your office, or their equipment damaged during your visit. Both cover types are needed for most professional service businesses. A single incident can sometimes generate both a public liability and a professional indemnity claim.
Policy Limits and Retroactive Dates
E&O policies have a retroactive date - work carried out before this date is not covered. When you first purchase E&O cover, the retroactive date is usually the policy inception date. As you renew with the same insurer, the retroactive date is typically maintained, extending cover backwards continuously. If you switch insurers, the new insurer may set a new retroactive date, leaving a gap in cover for past work. Negotiate to match the prior policy's retroactive date when switching.
Disclaimer
This guide is for general information only and does not constitute financial or insurance advice. Kaeltripton.com is not regulated by the FCA. Always read policy documents in full before purchasing cover.
Frequently Asked Questions
Is errors and omissions insurance the same as professional indemnity?
Yes. Errors and omissions is the American English term; professional indemnity is the British English equivalent. The products are the same - both cover claims arising from professional services that cause the client financial loss. UK insurers and brokers use professional indemnity; some technology sector contracts from US companies may use E&O.
How long does an E&O claim typically take to resolve?
Professional indemnity and E&O claims can take months to years to resolve, depending on the complexity of the allegation, whether the claim goes to court, and whether settlement can be agreed. Defence costs accumulate throughout this period. The insurer manages the claim and appoints legal representation from the point of notification.
Does E&O insurance cover subcontractors work?
If you engage subcontractors and present their work as your own to the client, your E&O policy typically covers claims arising from that work - you are the contracting party and bear the professional liability. Require subcontractors to hold their own PI cover as well, and review your policy's wording on subcontracted work to confirm the position before engaging third parties on client projects.
