Manufacturers E&O - What it is & Why it Matters

When you think of manufacturing risk, physical accidents and damaged equipment often come to mind. But what happens when a product doesn’t work as intended? Not because of a physical flaw, but due to a design, engineering, or performance error? That’s where Manufacturers Errors and Omissions (E&O) Insurance steps in, and it’s becoming more essential than ever.

What Is Manufacturers E&O Insurance?

Manufacturers E&O Insurance covers financial losses a customer may suffer due to your product failing to perform as promised, even when there’s no physical damage involved. It protects against lawsuits tied to:

• Design errors or inaccurate specifications

• Faulty instructions or software

• Negligent services tied to product installation, training, or support

If a client claims your product caused them business interruption, lost revenue, or extra costs, even without causing bodily harm or property damage, your general liability policy likely won’t cover it. That’s when E&O becomes a lifeline.

Note: Product Liability Insurance and Product Recall Insurance are different from Manufacturers E&O Insurance, but equally as important. We will discuss these two coverages and their key differences in another article.

Why It Matters in 2025

Today’s manufacturers aren’t just making parts, they’re delivering complex solutions. With automation, AI, and software-driven machinery on the rise, product failures often stem from performance gaps rather than broken components. One missed specification can halt an entire supply chain and lead to costly litigation.

Real-World Risk

Imagine a scenario where your custom-made controller unit for an automotive supplier functions mechanically, but the software code malfunctions under certain operating temperatures. If that causes production downtime for your client, you could be liable for significant economic damages and without E&O coverage, you’re footing the bill.

Bottom Line

As customer expectations, supply chain complexity, and technological integration increase, so do the risks manufacturers face. E&O insurance fills a critical gap left by general liability policies, shielding your business from performance-related claims that could otherwise derail operations.

Don’t let an oversight become an existential threat. Contact me to see if E&O is right for your risk profile.

Stay covered.

Email: Noah.Jankowski@aleragroup.com