What is the difference between D&O and E&O?
The difference between D&O and E&O lies in who is covered and what type of risk the policy protects against:
D&O insurance (Directors & Officers) protects company leaders against lawsuits over their decisions and actions while managing the business.
E&O insurance (Errors & Omissions) protects professionals and companies from claims related to mistakes, negligence, or failure to deliver services.
Most growing businesses carry both coverages because they protect different parts of the company.
What Is D&O Insurance?
D&O insurance protects directors, officers, and board members from personal financial loss if they’re personally sued for decisions they make on behalf of the company.
Common Claims Covered by D&O:
Mismanagement of company funds
Breach of fiduciary duty
Misrepresentation to investors or clients
Regulatory violations
Shareholder lawsuits
| Feature | D&O Insurance |
|---|---|
| Coverage focus | Leadership and management decisions |
| Who is covered | Directors, officers, board members |
| Common claims | Breach of duty, mismanagement, misleading actions |
| Typical industries | Corporations, startups, nonprofits |
What Is E&O Insurance?
E&O insurance — also known as professional liability insurance — protects businesses and individuals from claims related to professional mistakes or service failures.
Common Claims Covered by E&O:
Negligence or failure to perform services
Errors or omissions in work
Misrepresentation of service quality
Failure to meet deadlines or contractual obligations
| Feature | E&O Insurance |
|---|---|
| Coverage focus | Professional services and operational mistakes |
| Who is covered | Professionals, service providers, businesses |
| Common claims | Negligence, service errors, missed deadlines |
| Typical industries | Legal, accounting, IT, real estate, consulting |
D&O vs E&O: Key Differences
| Aspect | D&O Insurance | E&O Insurance |
|---|---|---|
| Main purpose | Covers leadership and management liability | Covers professional service liability |
| Who is covered | Directors, officers, board members | Professionals, consultants, service providers |
| Type of claim | Mismanagement, fiduciary breach | Errors, omissions, negligence |
| Trigger | Decisions made in leadership roles | Mistakes in professional services |
| Legal structure relevance | Typically for incorporated companies | Any business or individual offering services |
| Cost range | $1,000 – $5,000+ per year | $500 – $2,500+ per year |
In short:
D&O covers how the business is run.
E&O covers what the business does.
Real-World Example
A software company faces two separate lawsuits:
E&O Claim: A client sues because the software malfunctioned and caused financial losses.
D&O Claim: Investors sue the CEO for mismanagement of company funds.
E&O insurance would respond to the first claim, while D&O insurance would respond to the second. One policy cannot cover both situations.
When Businesses Need Both D&O and E&O
Many companies — especially those that provide services and have leadership teams — benefit from carrying both types of coverage.
You should consider both if:
You provide professional services to clients.
You have directors or officers making strategic decisions.
You have outside investors or a board of directors.
Your company is growing or seeking funding.
You want to protect both your operations and leadership.
| Business Type | Likely Needs D&O | Likely Needs E&O |
|---|---|---|
| Solo consultant | No | Yes |
| Startup with investors | Yes | Yes |
| SaaS company | Yes | Yes |
| Real estate agency | Possibly | Yes |
| Nonprofit organization | Yes | Possibly |
What’s Included in Each Policy
| Included | D&O Insurance | E&O Insurance |
|---|---|---|
| Legal defense costs | Yes | Yes |
| Settlement or judgment | Yes | Yes |
| Professional mistakes | No | Yes |
| Leadership decisions | Yes | No |
| Coverage for individuals | Directors, officers | Professionals, service providers |
| Employment practices liability | Sometimes | Rarely |
| Regulatory investigations | Often | Sometimes |
How Much Does D&O and E&O Insurance Cost?
| Policy Type | Average Annual Cost | Influencing Factors |
|---|---|---|
| D&O Insurance | $1,000 – $5,000+ | Company size, revenue, board structure, risk exposure |
| E&O Insurance | $500 – $2,500+ | Industry, claim history, coverage limits, service type |
Many insurers offer bundled packages, which can reduce costs when purchasing both coverages together.
Why Work With Toby Hansen Agency
Toby Hansen Agency searches nearly 100 carriers to find the lowest price with the most coverage for your business.
We help you:
Get tailored D&O and E&O policies
Avoid gaps in coverage
Protect both your leadership and your services
Receive proof of insurance fast
Whether you’re a startup, established company, or nonprofit — we’ll design a protection plan that fits your needs.
Final Thoughts
What is the difference between D&O and E&O?
D&O insurance protects your leadership and decision-makers.
E&O insurance protects your services and professional work.
Most businesses need both to stay fully protected against lawsuits, regulatory actions, and client claims.
For the best price and coverage, fill out the quote form below and let Toby Hansen Agency find your ideal D&O and E&O insurance package.
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