All businesses require insurance coverage to protect against lawsuits. Lawsuits can occur if someone suffers an injury on your property or if your services financially harm a client. A lawsuit can completely devastate your business, hence why you need to consider your policies carefully. Two of these policies include an Errors and Omissions policy or E&O and a Directors and Officers policy or a D&O policy.

Here is what you need to know when considering E&O vs. D&O policies.

What Is an E&O Policy?

An E&O policy provides coverage for products and services. For instance, a client may sue a company and claim that the workers, professionals or company did not perform adequate work or acted negligently.

What Is a D&O policy?

A D&O policy is similar to E&O, except that it is for executives and other officers. It can cover allegations of negligence like E&O, but for those who make high-level decisions. If someone is negligent in their duties as an officer, then D&O coverage protects them.

To choose between the two policies, you must analyze your business’s needs. Most businesses that have a comprehensive insurance plan will include both policies, as both provide coverage for different exposures. Rarely, you would only need one form of coverage. Most businesses need both.