Which provides protection to independent contractors from liability as a result of errors and omissions when performing their professional services?

Errors and omissions insurance, often referred to as E&O insurance, is specifically designed to protect independent contractors and professionals from liability arising out of mistakes, negligence, or failure to provide the promised services in their line of work. This type of insurance is crucial for individuals providing professional services, such as consultants, accountants, or IT professionals, as it covers costs related to legal claims of inadequate work or negligent actions.

This insurance safeguards against claims made by clients who believe they have suffered losses due to the contractor’s errors or omissions in their professional duties. For example, if a consultant provides inaccurate financial advice that results in a loss for a client, the E&O insurance would cover the legal expenses and any settlements or judgments against the contractor.

In contrast, major medical insurance primarily addresses healthcare costs, facilitating payment for medical treatments and hospital stays but does not cover professional liability. A hold harmless clause is a legal contract provision where one party agrees not to hold another party liable for any potential losses or damages, but it does not provide the comprehensive financial protection that E&O insurance offers. Liability insurance, while a broad term that encompasses different types of coverage, refers to general liability and may not specifically address errors made in professional services like E&O insurance does. Thus, for independent