What Does E& o Insurance Cover For Insurance Agents
While specifics vary by policy, errors and omissions insurance can shelter you in cases of:
- Accidentally giving the wrong advice
- Missing a deadline for your service
- Slander and libel when someone accuses you of communicating untrue things about them or their business
- Errors made by your team, subcontractor, or independent contractor, such as missing a waiver of coverage
- Claims of negligence and inadequate work
- Accusations of verbal promises that werenât fulfilled
- Eligible claims brought against you after you leave the industry or retire
While itâs common for E& O insurance to cover these situations, read policy terms carefully before signing to see what costs are covered. For instance, your E& O policy may only cover defense expenses and not settlements. Or it may not pay for attorney fees. Make sure your E& O business insurance policy meets your needs if youâre ever sued.
How Much Does E& o Insurance Cost Insurance Agents
The price of errors and omissions insurance can vary significantly depending on the policy you choose, the amount of coverage you buy, the size of your insurance agency, the number of people you employ and your location.
If you sell insurance on the side, a quick online insurer like Next or biBERK could make sense.
If you’re just starting an insurance agency, consider a carrier that packages E& O with a business owners policy, such as The Hartford or State Farm.
Check with an insurer whose policies you sell. If it’s good enough for your clients, shouldnt it be good enough for you?
As with any major decision, shop around for a few quotes from different insurers to make sure youre buying the best plan for your unique needs.
See how to protect your business quickly:
Does My Insurance Agency Need E& o Insurance
In general, businesses that provide services to customers for a fee should have E& O insurance. Insurance agents commonly face the following risks that E& O insurance could help protect against:
Failing or forgetting to obtain coverage. For example, you might forget about getting auto insurance for a client who later gets into an accident.
Recommending the wrong coverage to a client. For example, your employee might tell a client that buying property insurance will mitigate a risk when workers’ compensation insurance actually covers the risk.
Administrative errors on certificates of insurance or other paperwork. Errors on documents required to fulfill policy requirements could delay or disrupt coverage.
Failing to help a client settle a claim on a policy. For example, an employee may fail to return calls, fill out paperwork or answer questions correctly about a clients insurance claim, leading to less or no payment from the insurer.
Misjudging insurance risk on a clients property. This could cause the client to underinsure, which could lead to significant financial losses.
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What Does It Cover
To protect your business against the risks you are most likely to face as a life insurance agent, consider the following coverages as part of your risk assessment strategy:
- Errors and Omissions Insurance : Also known as Professional Liability Insurance, this is a mandatory coverage designed to protects life insurance agents against claims from financial loss to a client because of a service you provided. This can include lawsuits for failing to deliver a service as promised due to accusations of negligence or misconduct. Suppose you issued a life insurance policy to a 50-year-old non-smoker. When the client checks on his coverage years later, you notice you accidentally inputted that the client was a smoker, significantly increasing the rate theyd been paying. Your client could sue you for your mistake, and in this case, E& O insurance may cover the legal fees and damages, including monetary judgments.
- Commercial General Liability Insurance : Commercial General Liability Insurance can protect life agents against common claims or lawsuits that allege third-party bodily injury or property damage. Say youre about to provide a quote to a client in your office space. Your client falls off the wobbly chair you provided due to its instability. Your client could sue you should they be injured, and your CGL insurance may cover legal defence costs and medical costs.
Get Life Agents E& o Insurance Canada Fully Online With Us
Trust. Its at the heart of what you deliver as a life insurance agent in Canada. Above all, its why Canadians need your expertise as a life agent when it comes to purchasing life and health insurance products.
When you work as a life agent you are sought out as a trusted resource by individuals and families. Your clients want products that will provide them with peace-of-mind as well as confidence for the future. In other words, people count on you for expert financial advice.
In addition, as a life agent, you work hard to understand the specific needs of your clients and match them with the best possible insurance products. However, sometimes mistakes can happen. This is why it is important to get the best life agents errors and omissions insuranceCanada.
From Victoria, BC to Toronto, Ontario to Halifax, Nova Scotia and beyond, our ALIGNED Insurance brokers deliver E& O insurance that precisely fits the needs of life agents.
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How Much E& o Insurance Does An Insurance Broker Need
You commonly see brokers and other professionals with liability coverage between $1 million and $2 million. The amount of E& O insurance you need depends on your business and risk tolerance.
Lawsuits are expensive ordeals, and its essential to have the right coverage. If your legal fees or damage awards exceed your coverage limit, the remainder must come out of your own pocket.
You should also consider the insurers you work with. As a broker selling insurance products, certain insurance companies might require you to purchase E& O insurance. Their requirements may further mandate a minimum amount of coverage.
Which Businesses Benefit From E& o Coverage
This most commonly involves businesses that give professional advice to their clients. However, with some policies, it may also involve unintentional violations of copyright and other intellectual property law or defamation, such as libel. For companies that provide advice, an E& O policy is essential. It may also prove useful for companies that supply software and similar tools that clients might then use for their own businesses. Youll want to consider an errors and omissions liability insurance policy that will cover both the costs of any damages themselves and the costs of defending claims for your business.
Are you looking for an errors and omissions liability insurance policy for your business? Contact us to go over your business, the risks you face, and what your coverage options are.
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Common Errors And Omissions Claims Against Insurance Agents
Being an insurance agent comes with its own set of risks, and errors and omissions claims can arise even from a simple mistake. Its crucial that you provide the right insurance coverage for your clients, but its also equally important for you to have the appropriate small business insurance and E& O insurance policy for your agency.
Take steps to protect your business from these six common causes of insurance agent errors and omissions claims:
Top Causes Of Agent Errors And Omissions Claims
Why do insurance agents get sued? Typically, its because they do or say the wrong things, creating a financial loss for their clients. However, wrong can result from many different actions or statements and can vary based on an agents license type.
For example, if youre a P& C insurance agent, studies suggest the one thing you dont want to do is fail to procure coverage for your clients. According to research on members of the Independent Insurance Agents & Brokers of America , failure to procure coverage accounts for nearly one in five E& O insurance claims against P& C insurance agents…or 24 percent to be precise.
The reasons insurance agents drop this ball are complicated. Perhaps they failed to do a careful risk analysis and glossed over an important insurance need. Or maybe they shopped risks to their markets, but failed to find an insurer with a sufficient underwriting appetite. But then they never documented it or kept clients informed. Or perhaps they secured an insurance binder, but because of an administrative glitch, never locked down permanent coverage.
Whatever the reason, failure to provide insurance is the single largest lawsuit trigger for P& C insurance agents. Now that you know this, you can avoid making this mistake yourself. How? By always . . .
- Doing a thorough risk analysis for your clients,
- Diligently shopping for needed insurance, and
- Competently quoting, selling, and installing suitable insurance solutions.
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Errors And Omissions Insurance For Life Insurance Agents
Last updated by Michael Kuhn
Once you get your insurance license, the next step is to purchase errors and omissions insurance for life insurance agents. Its also sometimes called E& O insurance. In this article, Im going to talk about why you need to have E& O, how much you need to get as well as where you can get it and how much it cost. For the purposes of this article, Im going to assume you are a one person shop.
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What Errors And Omissions Liability Insurance Covers
In simple terms, general liability insurance covers the costs of physical damage, whether that be to a person or your business property. Insurance may cover financial losses that other peoplesuch as clientssuffer because of your actions or lack thereof. Coverage may include court costs as well as settlement costs, depending on your policy and the limits.
Does your business need E& O coverage?
If your business offers professional advice or services, such as financial professionals, contractors, non-profits, engineers, doctors, legal professionals, and the like, youll want to consider having an E& O policy for your business.
How much is errors and omissions liability insurance?
The cost of an E& O policy may vary depending on your business type, your location, and if your business has had lawsuits or claims made against you in the past.
Why Is Errors And Omissions Insurance Important
A lawsuit can result in costly legal fees, possibly placing your business and personal assets at risk. If your company is sued by a client, errors and omission insurance coverage can help pay for the following:
- Settlement costs
- Court-ordered judgements
Legal fees can add up, but there is also a cost associated with lost time and productivity as a business owner, and any employees assisting with the lawsuit. E& O coverage can help to support your business through these unfortunate circumstances.
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How Much E& o Insurance Do Insurance Agents Need
How much errors and omissions coverage you need depends on your financial statements, finances, the value of your assets, and your income. Knowing your financial standing is important because it could represent how much youâd have to lose if a client sued you. Youâll want E& O coverage at least as close to your total wealth as you can afford.
Another factor to consider would be the greatest possible loss resulting from one client lawsuit if you or an employee made a mistake. Also think about the number of annual transactions you make and your total lawsuit risk from these transactions. Your E& O policy should be robust enough to cover these amounts.
Errors and omissions insurance policies for $1 million to $2 million are typical. Specifics vary by policy, but that could mean youâre covered up to that amount for any single claim and the life of the policy . Any expenses beyond those amounts, youâd pay out of pocket.
Itâs important to talk to your insurer about your financial and business situation so they can help you determine how much insurance leaves you adequately protected. They’ll also provide an insurance quote that you can compare to decide which policies offer the best coverage at the most affordable price.
Example Of E& o Insurance
Let’s say a company that hosts servers used by third parties for data purposes is breached by hackers who gain access to proprietary information and client data. The companies affected by the hack then sue the server-hosting company for damages for inadequate security.
The server-hosting company has an E& O insurance policy and reviews it to see what the policy does and does not cover. To the company’s benefit, its errors and omissions policy is robust and covers such situations. The insurance company pays for the legal expenses involved in the court case against multiple companies. It also pays for any monetary damages rendered by the courts or settled in arbitration.
Having errors and omissions coverage helps the company avoid a substantial financial hitâeven bankruptcyâdepending on the company’s finances. If you or your employees are in the business of providing professional advice or other professional services, E& O insurance could be worth your consideration.
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Is E& o Insurance Required For Insurance Agents
Professional liability insurance isnât required by law for insurance agents, but the carriers you work with might ask for it before you can sell their policies. A brokerage firm or insurance agency youâre working with might also ask to see proof of errors and omissions insurance before passing on new business to you.
Even if you arenât required to carry errors and omissions insurance, itâs still a good idea. Weâre only human, and mistakes happen. Even when they donât, clients can sue for perceived errors, costing you and your agency thousands to hundreds of thousands of dollars in legal fees alone.
How Much Does E& o Insurance Cost
The premium for your E& O policy will depend on whether you or not you also sell variable products. If you dont sell variable products and stick to just fixed products like life and health, the annual premium at this time will probably be $600 or $700 dollars for $1 million policy. My friend who also writes variable products and has $5 million in coverage pays about $2500 per year for his at this time.
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How Much Does A Business Insurance Policy Cost
In general, errors and omissions insurance costs between $500 to $1,000 per year per employee. If itâs just for yourself, the average cost is typically cheaper because of lower limits and only one person needing coverage.
Your errors and omissions insurance cost as an agent can vary based on your:
- Type of insurance sold
E& O insurance tends to be pricier for P& C insurance agents than for life and health agents. If youâre more than one kind of agent, the one you earn more than 50 percent of your commissions in determines which type of E& O policy you must purchase. However, your E& O policy would still cover you in your other role.
When factoring in costs, keep in mind that before you can buy errors and omissions insurance, your insurer will likely want you to have general liability insurance and commercial property insurance in place first before theyâll sell you a policy. These two coverages are generally packaged within a Business Owners Policy .
Other insurances you might need are workersâ comp if you have employees and cyber liability insurance because you probably store sensitive information about clients and employees digitally.
Understanding Errors And Omissions Insurance
Errors and omissions insurance is a form of liability insurance. It protects companies against the full costs of a claim made by a client against a professional who provides advice or a service such as a consultant, financial advisor, insurance agent, or lawyer. It is a common form of business insurance that protects an entity should someone accuse that company of making a mistake.
Companies often obtain E& O insurance if they provide services to a customer for a fee. This form of insurance can be obtained from many major commercial insurers. Companies run out of a home-based office must buy a separate policy the company can’t get errors and omissions insurance under a homeowner’s policy.
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Examining The Top Reasons All Ontario Professionals Need Errors And Omissions Insurance
Ontario is truly one of Canadas biggest hubs for businesses. The province is fully of eager consumers, who are wealthy and ready to spend for the products and services they require. While these individuals are happy to spend a little extra, theyre very picky and will want the best service possible. As a professional in Ontario, you should understand that it is in your best interest to deliver the best service and experience. If you fail to do so, you could end up being hit with a lawsuit and that lawsuit could result in a bankruptcy. This is where Errors and Omissions insurance will prove to be incredibly important. Below, you will learn about the reasons for acquiring E& O insurance as soon as possible.
Believe it or not, Canadas legal system is ripe for frivolous lawsuits. Thousands of frivolous lawsuits are filed each and every year. And, it is important to remember that nobody is invulnerable to these problems. If youve served only a single client, you will still be at risk of being hit with a complaint. Even though you may have done nothing wrong, an unhappy client could still file a lawsuit against your company. If you do not have E& O insurance, you will be forced to pay for these costs out of pocket. This could greatly diminish your ability to defend yourself and you may end up losing in the end.
With this in mind, it is pertinent to maintain a valid E& O insurance policy no matter what! Do not think that youre invincible, because youre not.