Does Your Insurance Agency Have Adequate E&O Coverage?
In the complex insurance world, even the most meticulous agencies can make mistakes. These errors can lead to significant financial losses and damage to the agency’s reputation. Therefore, insurance agencies must have their own errors and omissions (E&O) coverage. However, E&O insurance can be a complicated subject and ensuring that your coverage is adequate may require a multistep analysis. 
Step 1: Understand Your Risks
The first step in ensuring adequate E&O coverage is understanding the unique risks your agency faces. This should typically include a thorough risk assessment, which may entail reviewing past claims, identifying common errors and analyzing areas of potential exposure. Understanding these risks allows you to tailor your E&O policy to your agency’s needs.
Step 2: Choose the Right Policy
E&O policies vary greatly, so choosing coverage that can address the specific risks your agency faces is essential. For example, your agency may want to prioritize a policy that covers defense costs and claims resulting from services provided in the past. You may want to be wary of policies with strict reporting requirements or those that don’t cover punitive damages.
Step 3: Maintain Continuous Coverage
E&O claims can often arise long after the original error was made. Therefore, maintaining continuous coverage is crucial. If there’s a gap in your coverage, a claim made during that period may not be covered, even if the error occurred while you were insured. To avoid this, always renew your policy before it expires and consider purchasing “tail” coverage to protect against claims made after your policy ends.
Step 4: Review Your Insurance Regularly
The insurance industry is constantly evolving, and so are the risks your agency faces. Reviewing your E&O policy regularly helps ensure your coverage keeps pace with these changes. Make it a habit to review your policy at least once a year or whenever significant changes occur in your business.
We’re Here to Help
At U.S. E&O Brokers, we have extensive experience providing ideal coverage to insurance agencies and other businesses. Contact us today to learn more about your options or to compare personalized quotes.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.