I agree that both parties have to carry E&O, but for a different reason.  There is no privity of contract between the title company's customer and the abstractor, therefore the title company is liable to their customer.  However, there is privity of contract between the title company and the abstractor, so the abstractor is liable to the title company for any errors or omissions. 

If the abstractor misses something that causes a loss, the customer would collect from the title company and the title company could attempt to collect from the abstractor.

Best,
Robert A. Franco
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