In any industry there’s likely to be jargon, abbreviations and shorthand that are understood by few outsiders. The insurance industry is no exception. Common abbreviations include d&o and e&o, but what exactly is d&o vs e&o?
What Is D&O?
D&O stands for directors and officers insurance. It is a form of management liability insurance and is typically an add-on to other policies. In general, D&O coverage is intended to protect executives from claims made against them for wrongful acts. These policies cover management from personal liability and allow them to make business decisions without fearing personal retribution. ‘Wrongful acts’ is a broad term that includes claims around employment practices, mismanagement of funds, investment decisions, unfair business practices and more.
What Is E&O?
E&O stands for errors and omissions insurance and is often called professional liability insurance. E&O is general insurance coverage that will protect the company from claims brought against any employee of the company. Claims that fall under e&o could include product design flaws, negligence, malpractice or financial or physical damage to a client.
Do Companies Need Both?
It depends on the company and the industry in which it operates. The decision is not typically d&o vs e&o, but whether the company needs more than a professional liability policy. In most cases, if it is financially feasible, it could be a good idea to get both kinds of coverage.