What Happens When a Client Sues You Over a Simple Oversight?

Your expertise is your livelihood. You spent years honing your skills, building your reputation, and securing client trust. But here is a tough truth: your greatest asset is also your greatest liability.

For professionals whose work is based on advice, service, or intellectual output, the risk isn't a slip-and-fall; it's a lawsuit claiming you made a mistake—an error or omission—that cost a client money.

One single claim, even if it’s baseless, can derail your business, drain your savings, and destroy your reputation. The high cost of legal defense alone is often enough to force a closure. This is precisely why Errors & Omissions (E&O) insurance is not a luxury; it is the single most critical investment for your professional survival.

What is E&O Insurance, and Why Is It Essential?

Errors and Omissions (E&O) insurance—also known as professional liability or professional indemnity—is designed to protect businesses that provide a service or give advice. It is your shield when a client alleges that your work was inadequate, contained a mistake, or failed to meet expectations.

As an expert, you are held to certain professional standards. If a client sues, claiming you breached that standard and caused them a financial loss, your E&O policy kicks in.

Crucially, it protects you even if the claim proves to be unfounded or frivolous. In the world of business lawsuits, being right doesn't matter as much as being defended.

The Three Lawsuit Threats E&O Defends Against

E&O insurance covers a range of scenarios where a client might try to recoup financial damages. The most common types of accusations include:

1. Negligence: This is the failure to use a reasonable degree of care in performing a task. For example, if you are careless in handling a client’s sensitive data and it gets stolen, that is negligence.

2. Errors: A simple mistake or bad decision made by you or an employee that directly causes the client a loss. A financial planner accidentally providing the wrong tax advice that leads to a penalty would be an example of an error.

3. Omissions/Unfulfilled Promises: This happens when you fail to do something you were expected to do or promise a result that doesn't come to fruition. If you guarantee your software will back up all customer data, and it fails during a critical moment, that is an omission.

Your E&O policy will cover the cost of damages awarded to the client, but the real value is often found in the defense costs.

Your Most Valuable Coverage: The Legal Defense

Lawsuits are expensive. A single professional liability case can easily cost tens of thousands of dollars in legal fees, even before a verdict is reached.

E&O insurance covers:

• Legal Defense Costs: It provides an attorney to represent you and covers all related defense costs, which can mount rapidly.

• Damages: It covers the damages—including costly punitive damages if allowed by law in your state—up to your policy limit.

When a letter from a lawyer arrives, your E&O insurance allows you to focus on your business while your carrier focuses on the courtroom.

Stop Worrying. Start Saving.

The threat of a career-ending lawsuit is a stressful burden no professional should carry alone. Securing comprehensive E&O insurance is the most important step you can take to move from walking a tightrope to standing on solid ground.

At Tans Agency, we specialize in cost-effective protection for experts like you. We work with many major carriers to find the coverage that fits your specific industry and risk profile.

Let us do the work to protect you and your business. Contact us today and find out how you can save up to 20% on your essential Errors & Omissions coverage.

If you’d like trusted guidance on Errors and Omissions Coverage or want a quick review of your current policy, our team is here to help—just reach out!

Phone: 469.269.6539
Email: sales@tansagency.com
Website: Tansagency.com
Contact  Tans Agency for a policy review: 469.269.6539