You’re performing a home inspection and miss a problem with the electrical system. The buyer goes through with the purchase, learns that correcting the problem will cost $6,500, and sues you to pay for that expense.

As an insurance agent, you provide professional advice and services to your clients. If you happen to make a mistake, you can be liable for any financial damages caused to them. A client might also accuse you of making a mistake, which means you have to defend yourself in court even if you didn’t do anything wrong.

As a real estate agent or agency owner, it’s crucial that you have proper insurance coverage for your business. There are a number of policies—what might collectively be called “real estate agent insurance” [link to real estate industry page]—that you need to protect your business from the high cost of liability and losses. That’s because your business faces many risks, including incidents like:

Both business liability insurance, like a general liability policy, and errors and omissions insurance (also called E&O insurance or professional liability insurance) help protect your company from lawsuits and the associated costs. However, they’re designed to address different kinds of risks.

Small business owners who provide professional advice or services often ask, “Do I need errors and omissions insurance?” The answer in virtually all cases is, “Yes, you do.” Errors and omissions insurance (sometimes written as E&O or E and O insurance) is professional liability insurance that protects businesses from claims by clients that the company’s employees made a mistake or neglected certain required actions.

Professional liability insurance is coverage for individuals and organizations that provide professional advice or services in the event that a client alleges a mistake or oversight was made. Also called errors and omissions insurance (or E&O for short), it’s critically important if your business is focused on providing expertise.