E&O for insurance agents, or Errors and Omissions, is a type of Professional Liability Insurance. It provides protection to businesses against lawsuits brought by clients who claim the services were incorrect or lead to a financial loss.
Whether you own a prominent insurance agency or are an independent insurance broker, you’ll definitely benefit from E&O insurance.
Why do Insurance Agents Need E&O Insurance?
Professional liability is the primary coverage for an insurance agency's business operations. E&O insurance protects you and your agency against any loss caused by an omission or error you or your staff made while providing advice to clients on what insurance policies are best for them. This could include anything from miscommunication between you are your clients, to missing or inadequate coverage, and more.
What does E&O insurance cover?
If a dissatisfied client sues your business over errors or omissions related to your work, E&O insurance can cover the expenses related to these claims, including the cost of legal settlements. Here are other areas that are covered:
- Work Mistakes and Oversights
Insurance agents can find themselves at risk of legal action as a result of doing their jobs. A small professional oversight resulting in a customer experiencing a loss they thought was insured could end up costing you a considerable amount of money.
If a client tries to recover their losses by suing you or your agency, E&O coverage for insurance agents helps in paying the legal fees that you otherwise would be left paying for out of pocket and any judgments a civil court obliges you to pay.
- Undelivered Services
As an agent, connecting clients with the right lenders and insurance carriers and products can come with high expectations. A single mistake can interrupt the plans of your client’s business. Moreover, when you fail to provide promised services or provide inadequate work, your client could sue you, especially if there is a negative impact on their bottom line. Here E&O insurance comes to the rescue. It helps pay for the legal fees, including settlements decided out of court and court-ordered judgments.
If your business fails to meet minimum industry standards while working with a client, then you might be sued for negligence.
Here again, Errors and Omissions insurance policy covers legal expenses, including defense costs like attorney fees.
How to buy E&O insurance When looking to buy E&O insurance, it’s crucial to understand the kind of coverage you need. There are three things you need to consider when purchasing E&O for insurance agents.
Everything starts with research. Although there are many carriers that provide E&O coverage, not all policies are created equal, especially when it comes to covering claims.
There are often exclusions for complex or unusual insurance products. As an agent you should always know the exclusions listed under a specific policy.
So when looking for the right E&O for insurance agents, it’s important to do your research to ensure the carrier you pick caters to the needs of your insurance company.
- Buy Early
As a responsible insurance agent, you probably advise your clients to buy E&O Coverage before they actually need it. Now you need to take your own advice.
The longer you wait to invest in E&O, the longer you, your staff, and agency are at risk. Most E&O policies use a retroactive date to determine if a claim can be covered. If a claim occurs before this coverage date you’re out of luck. So, act early and get covered as soon as possible.
- Make sure you have a plan
While E&O coverage is a vital safety net, you should also have a plan in place to prevent errors and omissions claims from happening in the first place. Make sure to use written contracts with your clients along with signing waivers when the client opts out of the recommended coverage. It is vital to communicate often with your clients about the changes to the enhancements on their policies.
What are the right policies for insurance agents?
E&O is just the start when it comes to finding the right insurance for insurance agencies and brokers.
In addition to E&O coverage, here are some other policies you should consider:
- Cyber Liability: Nearly all businesses today store sensitive information about their clients and employees online. It’s essential to protect the data against hackers with Cyber Liability.
- Business Owners Policy (BOP): If you own your own agency this can save you some money compared to purchasing General Liability and Commercial Property separately.
- Employment Practices Liability (EPLI): As your business grows, so does your risk of employment-related liability. This policy will protect your business against claims of discrimination, wrongful termination, sexual harassment, retaliation, and breach of contract.
If you’re ready to protect your business, get a free quote online today.