Errors and omissions (E&O) insurance is professional liability coverage that pays claims against an advisor for mistakes or negligence in the advice or service they gave.
If an advisor's mistake costs you money, such as an instruction never carried out, E&O coverage can mean there is money to pay a claim. It doesn't cover ordinary market losses on sound advice, and it is different from SIPC, which only applies when a brokerage firm fails.
Whether an advisor must carry it depends on where they are registered. In July 2026, Washington's securities division proposed requiring every state-registered adviser to carry at least $1,000,000 per claim and file proof each year. In the division's survey, 87 percent of responding advisers already carried $1 million or more.
How to check
Ask whether the firm carries E&O insurance, the coverage per claim, and whether it covers every service the firm provides you.
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