Difference Between E&O and D&O and EPLI (2024)

With so many insurance policies out there, you might be unsure if you need professional liability, (E&O) directors and officers (D&O), or employment practices liability (EPLI insurance). Depending on your business practices, you may need one or all three.

While general liability insurance can cover most risks you may face as a business owner, E&O, D&O, and EPLI insurance coverage can fill in the general liability coverage gaps that threaten you. Everyone should consider if they are susceptible to lawsuits not covered in their general liability insurance and purchase additional coverage accordingly.

Senior-level employees of a company face unique risks due to their job status. If a company goes under due to financial mismanagement, lenders can go after the directors and officers and blame them for its downfall. D&O insurance protects individuals from business-related lawsuits alleging their misconduct, misrepresentation of company assets, or financial negligence. Any business with a board of directors can benefit from D&O coverage, and it can help attract high-level employees to join the company.

D&O insurance also covers lawsuits related to:

• Failure to comply with employment laws
• Breach of fiduciary duty
• Misuse of funds
• Intellectual property theft
• Customer or employee poaching

Errors and omissions insurance, also known as professional liability insurance, covers the liability related to a service you provide. Those that need E&O insurance include real estate agents, accountants, insurance professionals, consultants, architects, engineers, and any other occupation that provides a service. When clients are dissatisfied with what they receive, they may choose to file suit. E&O coverage pays for lawsuit costs and damages if a client sues for negligence, missed deadlines, unfinished work, or errors.

E&O insurance also covers lawsuits related to:

• Breach of contract
• Negligence
• Failure to deliver work
• Work mistakes
• Unsound advice

Because general liability policies only cover lawsuits related to property damage, bodily injury, and reputational harm, E&O policies fill in a critical coverage gap.

While directors and officers insurance covers an accused company executive in employee lawsuits, EPLI insurance covers the whole company in the event of a lawsuit alleging discrimination, sexual harassment, failure to promote, wrongful termination, invasion of privacy, and other employment-related misconduct. Because of the various federal laws regulating employment practices, a company is vulnerable to litigation if it unintentionally violates an employee’s legal rights. EPLI coverage is often coupled with D&O coverage to form a management liability insurance policy.

Any business with more than one employee should consider EPLI coverage. Employment lawsuits are more common than many businesses think, and your company can get sued even if you follow all employment laws.

E&O and D&O policies are designed to cover claims originating from outside your business, such as negligence, errors, or omissions in the services you provide. That means that E&O and D&O policies don’t cover employee lawsuits since they aren’t related to your professional services.

On the other hand, EPLI policies are specifically designed to protect companies from employment-related lawsuits. Unlike D&O policies, EPLI covers those waged against the business entity itself rather than just specific individuals. This means that if an employee sues your business for wrongful termination or other employment-related issues, EPLI coverage pays for the associated costs.

Now that you know the difference between E&O, D&O, and EPLI insurance, you still may be wondering if you really need any of these coverages. There is no one-size-fits-all solution for all businesses, so it’s necessary to evaluate your risks to decide what coverage you need.

If your work is service-based and you can imagine a scenario in which an unhappy client files suit, you probably need E&O insurance. And if your high-level employees are susceptible to individual lawsuits, D&O is an excellent option to protect their interests. Any company with employees can benefit from EPLI insurance because employment-related claims are on the rise.

Southpoint Insurance understands that you have a lot on your plate as a business owner. We can take care of finding the right insurance coverage for your business so you don’t have to. Our team of insurance experts knows how to identify your unique business risks and can help you determine if you need E&O, D&O, or EPLI insurance to keep your business safe.

We partner with the best insurance companies, and we will advocate on your behalf to find top-notch coverage that fits your budget. Learn more about our carrier partners and contact us today to learn why business owners trust Southpoint with their insurance needs.