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What commercial insurance do independent insurance agents need?

Q: What commercial insurance do independent insurance agents need?

A: Now that you've started your own insurance agency, you'll need business insurance to manage your business's risks, pay for lawsuits, and meet your legal obligations. What insurance do independent agents need?

Two common and important insurance policies that almost all insurance agents have include:

  • General Liability Insurance. GL pays for your legal costs when a third party (client, customer, non-employee) sues your business over injury or property damage. Slip-and-fall accidents, reputational damages, and other lawsuits are all covered.
  • Errors and Omissions Insurance. Also called Professional Liability Insurance, E&O covers your legal expenses when clients sue you over mistakes in your work or problems with the policies you recommend.

In addition to these two basic insurance policies, many independent insurance agents will need Workers' Compensation Insurance (to fulfill legal requirements and cover employees), Auto Liability Insurance, and possibly Umbrella Insurance (which adds additional lawsuits coverage).

Which insurance agents need commercial insurance?

All insurance agents can benefit from commercial insurance coverage. Whether you're an independent agent or a captive insurance agent, your coverage can protect you from the cost of lawsuits.

Errors and Omissions Insurance is especially important for insurance agents because you can be caught "in the middle" between the insurer and the insured. If an insured has a problem with a policy, they could file a lawsuit against you and the insurance carrier. Though you're just the broker, a customer could claim that you misrepresented a policy or should have advised them differently about their coverage.

Why do independent agents need insurance?

Insurance protects you from legal costs and other unexpected expenses that could bankrupt your business. But there's another practical reason insurance agents need coverage: contracts often require business insurance.

A business lease, service agreement, or other commercial contract can require you to have General Liability or Errors & Omissions Insurance. Make sure you read over your business contracts and meet your commercial insurance requirements.

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