E&O insurance is something that you may need before you make a sale. It insures the distributor/network, etc., from a lawsuit. Now, this isn't exactly right one the nose, but it's about completion bonding and is a similar requirement for many films. http://www.easy-budget.com/articles/articles.asp?article=bonding

See, the bonding companies are looking for legal problems that might prevent a film from being completed, (i.e.; restraining order, or TRO). The lawsuits they're worried about are from a scene or statement in your production that may give rise to a lawsuit. Usually, a distributor will front the cost of the insuurance for you...especially if they have a pending sale. Some say, (including me!) that this is a crock that you have to get this insurance. There is a LOT MORE to this subject, (checking for title clearance, etc). I've bought/been forced to pay for several E&O policies over the years and you are welcome to write to me directly with any questions you might have.

johnt55 covered this pretty well. I might add that You want to make sure that your film is ELIGIBLE for E&O insurance if and when you get distribution. So plan ahead. Just make sure you have all your releases signed. Story rights, locations, music rights, product placements, etc, etc. I don't know that it is any cheaper before or after, but Your distributor will not distribute the film if your film is un-insurable.