Liability Insurance for Translators

What happens if you've made a mistake in a $100 job, your client claims your mistake cost him $100,000 and sues you for this amount? This is the nightmarish scenario that's being used to sell liability insurance, a.k.a. Errors & Omissions (E&O) insurance, to translators. In fact, at least in the U.S., there is no record of a translator ever having been sued, let alone successfully sued, for translation errors.

Despite this lack of precedent, some translation buyers now require that translators carry liability insurance. For translation companies, this may be an attempt to shift the responsibility for translation quality from themselves to the translator. For some unscrupulous operators, it may even be a ruse to raise cash at the expense of the insurance company (and ultimately of the premium-paying translator) by filing frivolous lawsuits for E&O.

Why hasn't there been any lawsuit for E&O against translators in the U.S., the country known for often frivolous lawsuits? We may have simply been lucky, or translation buyers don't consider translators wealthy enough to be sued. This latter reason would of course disappear if E&O insurance became widespread. According to some, translation is protected under the First Amendment right to free speech, but, to the best of my knowledge, this has never been tested in a court of law.

So, is liability insurance for translators an indispensable protection, an addition to our cost of doing business without any tangible benefit, or a dangerous bait, which by its very existence could encourage lawsuits against translators?

Have you ever been sued, threatened with lawsuit, or do you know of anybody who has been sued for errors and omissions? Do translators and/or translation companies usually carry E&O insurance in your country? Is the American Translators Association right in offering such insurance to its members?