What type of insurance primarily covers the cost of lawsuits for accounting errors?

Errors and Omissions Insurance is specifically designed to protect professionals, including accountants, from claims resulting from mistakes or negligence in the services they provide. This type of insurance covers legal defense costs and any settlements or judgments that may arise from lawsuits due to alleged mistakes or failures in their work.

It is essential for professionals who provide advice or services to clients, as it offers financial protection in case a client alleges that they suffered a loss due to an error or omission on the part of the service provider. This is particularly relevant for accountants, who handle sensitive financial information and must ensure accuracy in their work.

This coverage is not typically included in general liability insurance, which focuses more on bodily injury and property damage claims, nor is it related to property insurance, which covers damage to physical assets. Malpractice insurance, while similar, generally applies to healthcare professionals, making Errors and Omissions Insurance the appropriate choice for accountants dealing with potential litigation from their services.