“Errors Were Made”: The Gaps in E&O Insurance That Could Ruin Your Quarter

You’ve got E&O insurance! Great. That means you’re covered when a client says you messed up, right?

Well… maybe.

Errors & Omissions policies should protect you when a professional mistake leads to a financial loss. But in the fine print, there’s often a dangerous game of “gotcha.” And if you're not careful, that claim denial will sting worse than the original error.

Here are the most common (and costly) coverage gaps in E&O insurance. Don’t say we didn’t warn you.

Gap #1: The “Breach of Contract” Backstab

Why it exists: Many policies exclude claims arising from contractual liability.

Why it matters: Most E&O claims are tied to contracts. Clients don’t usually sue because you forgot their birthday; they sue because you didn’t deliver per the agreement.

How to fix it: Push for coverage that includes “failure to perform” under contract, or has carve-backs for negligence. Also: avoid “broad form” breach exclusions like the plague.

Gap #2: Intentional Acts (Even If You Didn’t Mean To)

Why it exists: Insurers don’t want to pay for fraud or willful misconduct.

Why it matters: Claims often allege both negligence and intentional wrongdoing. If the policy excludes the entire claim due to one intentional act, your coverage might vanish.

How to fix it: Look for “final adjudication” language. It means you're only excluded if you're actually found guilty in court, not just accused.

Gap #3: Intellectual Property Blind Spots

Why it exists: IP infringement is a hot potato, especially in tech, creative, and consulting spaces.

Why it matters: If your services rely on copyrighted content, algorithms, designs, or code… you could be sued for infringement and not be covered.

How to fix it: Add IP coverage (some insurers offer it as an endorsement). Or make sure your policy defines “personal injury” broadly enough to include IP-related claims.

Gap #4: Tech-Enabled Mistakes That “Belong to Cyber”

Why it exists: Carriers love to argue that anything involving email, data, or software belongs under your cyber policy.

Why it matters: If a software bug, email typo, or failed SaaS delivery leads to client loss, you could be caught in the dreaded “who pays?” crossfire between E&O and cyber.

How to fix it: Work with a broker who aligns your E&O and cyber policies, especially if you're a tech or service company. There should be overlap. There can’t be contradictions.

Gap #5: Prior Acts and Retroactive Dates

Why it exists: To stop you from buying coverage after you know something’s gone sideways.

Why it matters: If the wrongful act happened before your retroactive date, or if there's a long tail between service and lawsuit, you’re out of luck.

How to fix it: Always confirm the retroactive date. Better yet, ask for “full prior acts” coverage when switching carriers or onboarding new coverage.

Gap #6: Sub-Limits That Look Like Full Limits Until You Need Them

Why it exists: Some parts of E&O are capped lower than your total policy limit.

Why it matters: You might think you have $1M in coverage, but only $100K applies to regulatory claims, $250K for defense costs, and nothing for punitive damages.

How to fix it: Ask about sub-limits, defense costs inside vs. outside the limit, and whether punitive damages are covered in your state. It matters. A lot.

Final Word: E&O Doesn’t Stand for “Everything’s Okay”

Errors happen. Omissions happen. But a denied claim because of a sloppy policy? That’s preventable.

At Execurisk, we specialize in digging through the legalese, the exclusions, and the traps insurers don’t bring up in sales calls. Our focus on executive and professional liability means we understand the real-world claims that derail good businesses—and how to build a policy that actually works when it matters most.

Need a second opinion on your E&O policy? Let’s review it. (We’ll even bring highlighters.) info@execurisk.com | Schedule a review