Final answer:
Errors and Omission insurance is a professional liability insurance needed by professionals like real estate agents, insurance agents, attorneys, and accountants. It protects them against negligence claims and covers legal fees and settlements. The policies are tailored to the specific risks of each profession.
Step-by-step explanation:
Errors and Omission (E&O) insurance is a form of professional liability insurance that is required for professionals who provide services or advice to clients. This includes but is not limited to professions such as real estate agents, insurance agents, attorneys, accountants, architects, and consultants. E&O insurance helps protect these professionals from claims of negligence, mistakes, or omissions that may occur during the course of their work.
For example, if an accountant makes an error in a client's tax return that results in financial loss, the client could sue for damages. E&O insurance would help to cover the legal fees and any settlements or judgments that may arise from such a lawsuit. It acts as a financial safety net, ensuring that a single mistake doesn't financially ruin the professional. As each profession has its own set of risks and requirements, E&O insurance policies are tailored to the specific needs of the profession. Therefore, professionals should assess their risk exposure and choose an appropriate E&O insurance policy to safeguard against potential liabilities.