So one of your current or prior customers just sent you a demand for money or a lawsuit saying that you did something wrong and that they were financially harmed because of that. Now, don’t panic, this is why you have errors and omissions insurance.
The first thing you should do is locate a copy of your E&O policy. There is a section in your policy regarding what to do in case of a claim. You will need to notify your carrier in writing and give them some details about the claim.
Based on the allegations and amount of the claim, it is possible that you carrier will decide to non-renew your policy. This is a common practice when a carrier thinks that you are no longer a good risk.
In order to find coverage from another carrier, you will need to complete a new insurance application and disclose your claim history. You will also need you loss runs for the past five years. Loss runs are documents from insurance companies that show each claim you had in each policy year.
Some surplus lines carriers specialize in insuring agents or agencies with claims. You can however expect to see a significant increase in your E&O premium if a carrier agrees to quote you. You will usually be stuck with a higher priced policy until you remain claims-free for a period of five years.
So you have an E&O insurance policy and your client or broker asks to be added as an additional insured. Sounds reasonable, because they should also be covered if you mess up, right?
Well not so fast. Your E&O insurance policy is designed to cover you for your wrongful acts. There’s no telling that your E&O carrier would necessarily cover someone else just because they’re an additional insured.
There’s also the pesky “insured vs. insured” exclusion which says that no coverage is provided for a claim made by an insured against another insured. Well, what if your client or broker sues you for malpractice and they’re on your policy as an additional insured? Shouldn’t you be covered for that?
So therefore, be careful before you add anyone on your policy as an additional insured. It may result on a loss of coverage for you.
New P&C agents tend to pay quite a bit more than experienced P&C agents for their E&O insurance. The line between a “new” and “experienced” agent is typically being licensed for 3 years.
The higher E&O costs for new agents is due to the inexperience and the higher chance of making a mistake which can result in a lawsuit.
We have multiple E&O insurance options for new P&C agents and can help you find a reasonable deal.
Let’s face it, being an insurance agent can be a lot of work. You’re dealing with a lot of customers, some of them demanding, a lot of them confused about insurance, and you have to keep them all happy. This means that renewals and new applications have to be processed on time, questions have to be answered, and changes in coverage have to me made.
This leaves a lot of room for an agent to make an error or omission. Even if you don’t end up making an error or omission, you can have an unhappy customer (usually one of the confused ones) file a claim against you.
It is estimated that one out of seven insurance agents will have an E&O claim filed against them during their career. Needless to say that defending such claim, in addition to possibly having to pay damages, can be time consuming and expensive.
This is why E&O insurance is purchased by most insurance agents.
The retroactive date, also called the prior acts date, is an important part of the E&O insurance policy which is sometimes overlooked.
We’re a retail insurance agency and provide E&O insurance to all types of insurance agents, brokers, agencies, and brokerages.