Errors and Omissions (E&O) Insurance
for Insurance Agents and Agencies
Insurance agents make their clients' lives easier by taking complicated business and financial matters out of their hands. But as you work to streamline complex processes on your clients' behalf, the expectations and stakes are high. When they work with your firm, your clients expect to be connected to insurance providers and lenders that they can trust. And moreover, they expect you to steer them in the right direction. So if you make an oversight or error while performing your duties as liaison, a disgruntled clients may decide to let the courts handle the issue.
For protection against such claims, most insurance agents arm themselves with Errors and Omissions Insurance (also known as Professional Liability Insurance). When a client does decide to sue your business for professional negligence or errors you made in your work, your insurance agency will have the means to hire an attorney to defend you in court, as well as any judgments and settlements, bond premiums, and other costs related to the claim.
Learn more about Professional Liability coverage and why your firm benefits from incorporating this policy into your business protection plan.
E&O Insurance: Protecting Insurance Professionals
E&O Insurance: Protecting Insurance Agents
Errors and Omissions (E&O) Insurance, also known as Professional Liability Insurance, acts as a safeguard against lawsuits challenging the result of your delivered services or the way you carried out these services. If a client alleges you were professionally negligent; provided shoddy, incomplete, or incorrect work; made mistakes or oversights; or that your business failed to perform professional duties, your Professional Liability coverage provides for attorney's fees, court-ordered settlement or judgment costs, and other court costs, depending on your policy. Your coverage can protect your firm even if the case is ultimately thrown out so that you don't have to dip into your bank account to cover the cost of hiring an attorney.
Errors and Omissions Insurance is particularly important for professionals who deal with clients' money, as their perception of your work will be colored by whether or not their investment proved fruitful. Even if you are not at fault for a financial loss they may experience, they may be looking for someone to blame. Unfortunately, today's litigious culture allows unhappy clients the kind of outlet they may be searching for in the legal system. Sometimes, the decision to turn to the courts is more a reflection of the client's attitude than it is an accurate response to your work.
However, if you are truly responsible for a mistake, your coverage allows you to own up to your actions, even if that means time spent in court. It's important to note your E&O coverage will only kick in to cover incidents that occur during the life of the policy. To protect your business from professional errors, you'll need to have a policy already in force before you begin work.
Depending on your state's statute of limitations, a client could sue your business for work you completed months ago. This is why most insurance agencies opt to carry a single Errors and Omissions policy throughout the life of their business. You never know when a client may decide to sue due to a communication breakdown that results in serious losses. E&O coverage ensures that you have the means to address unexpected lawsuits without financially burdening your business.
Errors and Omissions for Insurance Agents: Key Details
Errors and Omissions for Insurance Agents: Key Details
As you shop for an Errors and Omissions policy for your insurance agency, be sure to talk to your Insureon agent for guidance. Our agents specialize in providing coverage that accounts for the unique risks you face and can help you determine appropriate policy limits. Additionally, take a look at the following Errors and Omissions details you'll want to consider.
Claims-Made Coverage in Errors and Omissions Policies
Most Errors and Omissions policies available are based on "claims-made" coverage. That means your policy must be active when an alleged incident occurs and it must be in force when the claim is filed. Claims-made policies only kick in when you meet both requirements. For this reason, most insurance brokers carry their Errors and Omissions policy as long as their business doors are open.
If you have an Errors and Omissions policy and want to switch in favor of a new policy or carrier, you'll want to purchase a "tail" for the transition period. Otherwise, you may leave your business vulnerable to claims if any are filed during this interim time.
Tails and Prior Acts for Coverage Gaps in Errors and Omissions Insurance
As mentioned earlier, if you need to end your current E & O coverage, you won't be able to file any claims until you procure a new policy. Even then, your new policy may not cover incidents that happened during the life of your former Professional Liability plan. To account for these cases, carriers often offer what is called "tail" coverage and "prior acts" coverage. These policies keep your business from the financial pitfalls you may encounter due to gaps in your protection.
Tail coverage allows you to report claims even though your previous policy has ended and your new one has yet to begin. Prior acts coverage allows you to file a claim for events that may have already taken place but hadn't been reported. If you need more help navigating your transition to a new E & O policy, be sure to talk to our insureon agents — we're happy to help.
Find an Errors and Omissions Policy
Find an Errors and Omissions Policy for Your Insurance Business
Serving clients and handling their investments comes with the inherent risk that you may one day face a costly liability lawsuit. When you're ready to protect your business in case the unexpected happens, we can help you tailor your Errors and Omissions plan based on the number of employees you have and professional responsibilities you perform.
Depending on your needs, we may be able to send you quotes in just minutes. To get started, complete our quick online application today!