Understanding the right liability insurance for your business is essential to financially protecting your organization and, in some cases, its leaders. Directors and officers (D&O) insurance and errors and omissions (E&O) insurance are two of the most commonly needed types of coverage for businesses across various sectors. However, they may often cause confusion, as each serves a distinct purpose. Understanding what each covers is crucial.
What Is D&O Insurance? 
D&O insurance is designed to cover your company’s financial interests, as well as the personal assets of its directors and officers. If a leader faces allegations that they made improper decisions that negatively impacted the company, they could be held personally liable for resulting losses. For example, a D&O policy might help mitigate the fiscal ramifications of accusations involving mismanagement, breach of fiduciary duty or failure to comply with regulations. D&O insurance can be especially important for organizations with a board of directors or those seeking to attract experienced leaders.
What Is E&O Insurance?
E&O insurance, also known as professional liability insurance, can cover your business and employees against claims of improper services or work, such as due to negligence, mistakes, oversights or breaches of contract. This policy is crucial for professionals such as health care providers, consultants, accountants, real estate agents and technology firms. Anyone whose advice or expertise could lead to a client’s financial loss should highly prioritize E&O coverage and may even be required to do so.
Which Coverage Does Your Business Need?
Your company’s coverage needs typically depend on its unique circumstances, including its industry, structure and risks. Many businesses benefit from both types of coverage. Our team can help you assess your exposures and build a tailored insurance strategy.
Contact U.S. E & O Brokers today to discuss your liability coverage needs and learn more about D&O and E&O policies.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.