If It Ain't Brokered, Don't Risk It
What Does E&O Insurance Cover for Insurance Agents?

Errors and Omissions Insurance, to put it simply, covers lawsuits over professional errors (real or perceived) brought by clients or third parties. For doctors, it comes in the form of "Malpractice Insurance." For engineers and architects, it's "Professional Liability Insurance." But for insurance agents, this valuable coverage is often called "E&O Insurance."

Though procuring General Liability Insurance for a client may not seem as high stakes as completing heart surgery or creating a blueprint, an insurance agent's liabilities are all too real and present. For instance, if your client accuses your agency of leaving them underinsured, they may try to sue your business to make up the difference.

That's where Errors and Omissions coverage comes in. This policy can help pay for your legal defense fees and settlements or judgments when an unhappy client takes their wrath to the court. Let's take a look at how E & O Insurance can help protect your agency from real or alleged issues with your services.

Types of E&O Claims Insurance Agents May Face

Types of E&O Claims Insurance Agents May Face

Professional errors come in all forms for insurance agents, so it's important to be on top of your game. To do that, you need to know what risks you face. According to the Independent Insurance Agents & Brokers of America, the most common claims against insurance agents involve…

  • Failure to procure coverage.
  • Failure to adequately explain policy provisions.
  • Failure to adequately identify exposures.
  • Failure to recommend a coverage type.
  • Inaccurate / incomplete information provided to the carrier.
  • Failure to provide timely notice of a claim to the carrier.
  • Negligent misrepresentation.
  • Failure to add an Additional Insured / Loss Payee to a policy.
  • Failure to duplicate prior coverage.
  • Alleged failure to pay a claim.
  • Failure to recommend adequate policy limits.
  • Failure to notify a customer about their policy cancellation.

As you can see, it's a long list, and it highlights many different facets of an agent's responsibilities. And it's not even an exhaustive list! With such a plethora of possible pitfalls, E&O Insurance is a necessary safety net for any small insurance agency.

It's important to note that you could face a lawsuit even if you haven't made a mistake. If the client feels that you made an oversight or blames you for their own bad insurance decisions, they could escalate those bad feelings into a professional negligence lawsuit. Even if they don't have much of a case, you must still resolve the issue or risk facing a default judgment if you ignore it. E&O Insurance provides coverage for legal expenses even when the lawsuit is frivolous.

To learn about ways to reduce the risk of an E&O lawsuit, read, "Avoiding Common Errors & Omissions Claims against Insurance Agents."

Insure Yourself, Too!

Insure Yourself, Too!

You spend your days insuring clients and addressing their concerns and exposures, but don't forget about protecting your own business. Having Errors and Omissions Insurance ensures you don't have to drain your coffers to fend off a lawsuit. Fill out an online application to get free quotes today, or contact one of our insurance agent experts.

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