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Frequently Asked Questions

Question: What is E&O?

Answer: E&O is short for Errors & Omissions. The term "Professional Liability" is synonymous with Errors & Omissions. In general, an E&O policy covers claims made by third parties alleging wrongful acts which are defined in the policy and usually include mistakes made in performing, or a failure to perform a defined professional service for others for a fee. For a hedge fund, the E&O policy protects the adviser entity against claims made by third parties alleging wrongful acts, such as a failure to follow the investment strategy advertised in the PPM. E&O policies pay for defense costs as well as the cost of a judgment or settlement.