As an insurance agent, you likely understand how important it is to manage the flow of information through the agency. However, that’s a lot of data to manage. So, the chances of a mistake on one of your policies might prove very high at times. If even small errors occur, you could put your customers, your parent company and your own agency at risk. Therefore, you have to respond appropriately. How can you do so? Most agencies find help from their professional mistakes within errors & omissions insurance.
Understanding E&O Coverage
Your agency will likely have general liability insurance. This provides coverage for property damage or bodily injuries to others. However, given that you deal in a professional service, you’ll face liability risks on that front as well. In such situations errors & omissions insurance might come in handy.
E&O coverage applies to professional mistakes you make that harm other parties. If these groups suffer financial losses, they might have a right to sue the business or request compensation. Your E&O coverage might the help you settle these claims and provide for your defense. The business and the affected parties might both therefore be able to settle.
Let’s say that it is time to renew a client’s policy for next year. When updating the policy, you accidentally change the limits of the policy. You also fail to notify the client of these changes. The client did not consent to the changes, and the results might put them at risk of monetary loss, claims denial and other unsatisfactory problems. As a result, they might blame the company, and expect compensation in case of losses. This is a perfect example of what an E&O insurance policy might cover you in return.
Risk Management Remain Key
Any claim on an E&O insurance policy is not ideal. That’s because, if you do have to make a claim, it might raise your risk profile in the eyes of your insurer. Thus, your agency might have to pay more for its own insurance coverage, and no one wants that.
As a result, the agency’s priority should be to reduce the risk of policy mistakes in the first place. You can do so by putting in place a rigorous checks and balances process. Agents should know that there is a process that they must follow when making any changes to policies. There should also be a system to encourage the checking and double-checking of work. At the end of the day, this will likely prove beneficial for consumers, and the business’s reputation.