So yeah, I didn’t always think about this stuff. You do the work, clients trust you, right? But turns out, sometimes trust ain’t enough.
Why This Insurance Thing Matters
I’m a financial advisor. Been doing it long enough to know—stuff goes sideways. Fast. Even when you didn’t do anything wrong? Boom. Lawsuit. One bad day, one bad email, or just one client “feeling misled” and you’re suddenly in court explaining yourself.
E&O insurance, or Errors and Omissions insurance, is the shield I didn’t know I needed—until I did.
And yes, some folks call it malpractice insurance or professional liability insurance or whatever. Fancy names. But basically, it’s your oh-no safety net.
What’s it for? Bad advice, missed stuff, mistakes, wrong forms filed, timelines ignored, “you never told me that,” — all that good stuff. True or not doesn’t even matter sometimes.
Scenarios? I’ve seen ’em:
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Client said my advice cost ‘em a chunk. Wasn’t true, but they believed it.
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Misunderstanding in a retirement rollover deadline. They blamed me.
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One time, wrong form filed, cost like $11k in late tax fees. Oof.
Did I lose sleep over it? Yep. Would’ve been worse without coverage? Definitely.
Okay But Like, What It Actually Cover?
Legal fees? Covered. Even if you did nothing wrong.
Judgments? Settlements? Yup—up to whatever your policy limit is.
Disciplinary stuff? Some policies—depends which one you bought.
Lost earnings if you miss work fighting a claim? That too, maybe.
What it don’t cover?
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If you do something shady on purpose (like fraudin’ folk? You’re on your own).
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You punch a guy? Or your chair breaks someone’s foot? That’s general liability, not this.
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Hacker stole client data? Get cyber insurance instead.
Read. The. Fine. Print. Seriously.
Mandatory or Nah?
Some states, maybe. SEC? Not exactly—but your firm or your client might require it anyway.
Me? I got tired of gambling. One bad case and the legal bills alone could shut me down. That’s not dramatic. That’s math.
Honestly, it’s peace of mind money. It’s sleep insurance.
Price Tag: What’s the Damage?
Look, it varies a lot. My buddy who handles high-net-worth clients pays way more than I do. Why?
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His assets under management? Massive.
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His advice scope? Complicated.
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Also, he got sued once in 2021. So yeah.
My premium last year? A little over $3,000. I’ve seen folks pay $500 or $5,000+—depends on:
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How many employees you got
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Type of services you give
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Where you live (insurance is weird like that)
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Your deductible & policy limits
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If you’ve had claims before
Some providers even give discounts if you’re super neat with your record-keeping and compliance.
Choosing a Policy: Headache or Homework?
I used to just click “cheapest option” but not anymore. Now I look at stuff like:
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Per-claim limit: How much they’ll pay for one single claim
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Aggregate limit: How much they’ll pay in total for all claims in a year
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Deductible: Can I afford it if it hits the fan?
Retroactive dates matter. Like, if I did something back in 2022 and they sue me now, the policy better be able to handle that. Not all do.
Also, “tail coverage”—super important if I retire or take a break and a client decides to sue after I’m out the game. You want coverage that follows you after your policy ends. Most don’t include that unless you buy it.
Reading the Policy: Not Fun But Do It
These documents are long, full of jargon, and lowkey painful to read. But you gotta.
One policy I almost bought excluded “tax-related advisory errors.” That’s literally half of what I do.
Another one had weird wording around “fiduciary duties” for employer-sponsored plans like 401(k)s—turns out, it needed a separate policy. So I added that.
The Company You Pick? It Matters
I chose an insurer who knew the finance world, not just general business stuff. They actually understood what I do. That helped.
Also checked their AM Best rating. You don’t want your insurer going broke when you need ’em most.
Final Thought Before I Go Make Coffee
E&O insurance ain’t glamorous. Nobody brags about it. But it’s saved careers—probably lives too, if we’re being dramatic.
Don’t wait for a lawsuit to start googling “How do I defend myself in court without losing my practice.”
Trust me. I’ve seen the emails. You don’t want that smoke.