electronic products errors and omissions insurance
A policy form designed to cover claims in which the malfunctioning or nonfunctioning
of electronic products causes financial loss rather than bodily injury (BI) or property
damage (PD). For example, assume an accounting software program contains a "bug"
that causes a company using the software to understate its receivables by $500,000
during a fiscal year. An electronic products errors and omissions (E&O) policy would cover the software
manufacturer's liability for losses sustained by the customer under these circumstances.
Such policies are needed because commercial general liability (CGL) insurance
is limited to covering BI and PD liability, rather than
liability for financial loss.