E&O Insurance for Insurance Agents
Our agency provides errors and omissions (E&O) insurance to insurance agents, brokers, agencies, reinsurance brokers, MGAs and MGUs, crop agents and other insurance professionals who offer any type of P&C, life, health and accident coverage. We have access to multiple carriers and can secure E&O insurance for any type of risk, from the simple retail agency to the more complex managing general agency. Even if you're having difficulty finding coverage because of your specialty, a history of claims, or bankruptcy, we can help.
This website is designed to provide you with information regarding the products we offer and easy access to our applications. If you're looking for coverage for professionals other than insurance professionals, please visit our other website at www.cbspecialty.com. To request quotes, please first verify that we operate in your state (see list below). Complete an application and return to us. Do not hesitate to call us at 1-877-245-5887 if you have any questions or wish to discuss your errors and omissions needs.
We operate in the following states: Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Utah, Vermont, Washington, Wisconsin, Wyoming.
What types of insurance agents can you provide E&O insurance to?
We can provide E&O insurance to all types of agents and brokers, including:
- Experienced P&C Agents
- New P&C Agents
- Life, Accident & Health Agents
- Crop Agents
- Reinsurance Intermediaries/Brokers
- Title Insurance Agents
- Bail Bond Agents
- Life Settlement Brokers
P&C agents are considered to be experienced when they have been licensed for at least three years. Wholesalers are an intermediary broker between the retail agent and the insurance company and are often used to access the surplus lines market. Managing general agents manage specific insurance programs on behalf of insurance carriers and have binding authority. Reinsurance intermediaries are brokers who help negotiate and secure reinsurance contracts between the ceding company and the reinsurance company. Life settlement brokers negotiate life settlement transactions between owners of life insurance policies and life settlement providers.
Whether you're an experienced or a newly licensed agent, we have a market for you. We also provide errors and omissions insurance to the less common types of licensees, such as credit insurance agents, limited lines travel insurance agents, motor club agents, portable electronics insurance agents, rental car agents, and self-service storage agents.
Why is it important for agents to have E&O insurance?
Insurance agents face significant exposure to professional and malpractice claims, including the following:
- Failure to recommend the proper product
- Failure to bind or renew the policy on time
- Failure to recommend adequate policy limits
- Failure to provide a correct specimen policy for review
- Failure to disclose policy exclusions
- Failure to disclose material information
- Failure to provide material information to the insurance company
Being an insurance agent entails a high level of risk. Insurance agents are expected to place the right coverage at the right time, to process the paperwork and payments correctly, and to satisfy the requirements of both the policyholder and the carrier. Policyholders rely on their coverage to protect them when they need it. Carriers expect to be paid on time and to have all relevant facts disclosed to them on the application.
It is estimated that one out of eight agents will report an errors and omissions claim to their carrier each year. The cost to defend such claim and to pay damages can be devastating to an agent or agency. Claims against insurance agents mostly arise from policyholders but can also arise from the carrier with which the agent places business.
Errors and omissions claims arising from policyholders will typically be based on a claim which was denied or only partly covered by the insurance company. Policyholders will often try to recover their financial loss from their insurance agent.
Errors and omissions claims arising from a carrier with which the agent places business are usually based on the failure to follow binding authority agreement, failure to follow underwriting standards, failure to provide information to carrier prior to binding, and failure to non-renew or cancel coverage.
Also, agents are usually required by their carriers, managing general agents, aggregators, wholesalers, and sometimes state insurance department to provide proof of E&O insurance.
What coverage does an E&O policy provide insurance agents?
E&O policies typically provide coverage for defense costs and damages resulting from a negligent act, error or omission committed by the agent in rendering or failing to render professional services. The policies are only available on a claims made form. Claims made policies provide no coverage for claims resulting from an act, error, or omissions which took place before the retroactive date. It is therefore important that insurance agents keep the same retroactive date at each policy renewal. As a lapse in coverage can result in the loss of the retroactive date, and therefore a loss of coverage for prior acts, insurance agents should make sure that they renew their E&O policy on time.
It should be noted that E&O policies provide coverage for the owners, officers, directors and employees of the insured, but not necessarily for independent contractors. To the extent that an insured uses independent contractors and wants them to be covered, then the policy form should be reviewed to determine if such coverage exists and if not, the independent contractors should be added as additional insureds on the policy or through an endorsement providing blanket coverage for independent contractors.
Insurance agents should carefully review their E&O policy, including the coverage, exclusions, definitions, conditions and endorsements before making their initial purchase and at each policy renewal, in case changes were made by the insurance company to the policy form. Some of the most common elements that should be reviewed are as follows:
Policy limits and deductible: The typical E&O policy limit for insurance agents is $1 million per claim / $1 million aggregate and is basically a standard in the insurance industry. Some insurance agents may find that they need a larger policy limit. The most common deductibles are $2,500 and $5,000 per claim but larger agencies may be able to afford a larger deductible which helps lower the premium.
Covered products: Some E&O policies list the specific insurance products that are covered under the policy. Such list should be carefully reviewed by insurance agents to make sure that the products they offer are covered.
Defense costs: The policy should be reviewed to see if the defense costs are inside or outside the policy limits. Defense costs which are inside the policy limit erode the amount of insurance which is available to pay for damages. As an example for a $1 million / $1 million policy with defense inside the limits, if defense costs for a claim are $400,000, then $600,000 remains available to pay for any damages. When defense costs are outside the policy limits, then they do not erode the amounts available to pay for damages, to the extent that there is no seperate limit for such defense costs.
Retroactive date: As discussed above, the retroactive date sets the beginning of the coverage, which means that acts, errors or omissions by insurance agents which took place before the retroactive date are not covered. Typically, when a insurance agent switches from an E&O carrier to another, the same retroactive date is kept to the extent that there was no gap in coverage or no claim. When an insurance agent switches carriers because of a claim, it is common for the new carrier to reset the retroactive claim (called retro-inception date), which means that no coverage is available for prior acts.
Extented reporting endorsement: When an insurance agent stops working, because of events such as retirement or a career switch, then the E&O policy is typically not renewed. However, a claim can still be reported down the road for an act, error or omission which took place when the agent was working and which would not be covered to the extent that no E&O coverage is in place. An extended reporting endorsement, also called tail coverage, is designed to provide coverage for such claim as it provides coverage for claims reported after the agent stops working. These endorsements are only available for a specific number of years and the cost is based on a percentage of the premium of the last E&O policy in place. As those details are included in the E&O policy, insurance agents should review them to make sure that they understand the cost and the number of years that such endorsement is available for.