Which best defines "errors and omissions policy" in the insurance sector?

An errors and omissions policy is specifically designed to protect professionals in various fields—such as insurance, real estate, and consulting—against claims of negligence, inadequate work, or failure to perform within the standards of their profession. This type of insurance provides coverage for legal defense costs and settlements that may arise from lawsuits related to mistakes or oversights made during the provision of services.

In the context of the options provided, the choice that clearly encapsulates the essence of an errors and omissions policy is the one that addresses coverage for negligence in professional advice. Professionals rely on this type of policy to safeguard their financial interests, ensuring that they are defended against allegations that they did not perform their duties with the expected level of care, thereby protecting their business and reputation.

This policy is crucial for any professional providing services that require specialized knowledge and expertise, as it acknowledges that even well-intentioned professionals can occasionally make errors that lead to financial repercussions for their clients.