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Errors and omissions (E&O) insurance for insurance agents and agencies

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Errors and omissions insurance

Errors and omissions insurance (E&O) helps cover the cost of a lawsuit if a client claims your work was inaccurate, late, or never delivered. It’s sometimes called professional liability insurance.

E&O insurance covers mistakes and oversights

An accusation of professional negligence, errors, or an unfulfilled promise related to your insurance services could lead to a client taking you to court. As an insurance professional, you realize how devastating a legal battle can be. Fortunately, errors and omissions insurance can protect your business from such claims by paying for legal expenses.

This policy provides coverage related to:

  • Professional mistakes
  • Failure to deliver promised insurance services
  • Accusations of professional negligence

What coverage can errors and omissions insurance provide for insurance agents and agencies?

Professional mistakes

Mistakes happen, and insurance professionals – from claims adjusters to insurance agents – are susceptible to legal action. If a client sues over a mistake or an oversight, you could face a significant loss. E&O coverage for insurance agents helps pay for your legal fees, which can mount up even for a frivolous lawsuit.

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Failure to deliver promised services

As a liaison, insurance agents connect clients with insurance providers and lenders. Expectations are high, and if your business fails to perform its professional duties, you could face a lawsuit.

E&O insurance for insurance agents, also called professional liability insurance, can help pay for your legal fees, including court-ordered judgments or settlements decided out of court. Speak to a licensed Insureon agent for guidance on shopping for E&O insurance.

Accusations of negligence

Insurance professionals are not immune to claims of professional negligence. For example, a client could claim that your advice led to insufficient coverage. When a client files a lawsuit to recoup for financial losses, an E&O insurance policy can cover your legal expenses, including the cost of hiring an attorney.

Why is it important to keep an E&O policy active?

There's one important fact you should know about E&O: it's a claims-made policy. You can only receive benefits if your policy is active both when the incident happened and when the claim was filed.

That means you'll need to keep this coverage if you retire or switch from freelancing to a full-time job, if you want coverage for your past work. And that's true for your clients, as well.

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How much does E&O for insurance agents cost?

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Most insurance agencies pay a median of $59 per month for E&O insurance, but you could pay more or less depending on your risks.

Insurance costs for insurance professionals are based on a few factors, including:

  • Amount of coverage
  • Claims history
  • Industry risk factors
  • Business size
  • Day-to-day operations

Other policies for insurance professionals to consider

While E&O insurance covers potential fallout from a professional mistake, it does not provide complete protection. Insurance professionals should also consider:

General liability insurance: This policy covers expenses related to customer injuries, customer property damage, and advertising injuries, such as slander.

Workers’ compensation insurance: This policy is required in most states for insurance businesses with employees. Even sole proprietors should consider this coverage, as it helps pay for medical expenses if you're injured on the job.

Business owner's policy (BOP): This policy combines general liability insurance with commercial property insurance, usually at a lower rate than purchasing the policies separately.

Commercial auto insurance: Insurance businesses that own vehicles need to carry this policy to comply with state laws. It helps cover costs if a vehicle gets into an accident.

Cyber liability insurance: This policy helps insurance businesses recover from data breaches. It's recommended for small businesses that handle sensitive information.

Get free quotes and buy online with Insureon

Are you ready to protect your insurance business with errors and omissions insurance? Complete Insureon’s easy online application today to compare quotes from top U.S. carriers. Once you find a policy that fits your needs, coverage can start in less than 24 hours.

Updated: May 11, 2022
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