Insurance agents come with strong professional backgrounds. However, each of them also brings risks to your business. An agent’s actions may lead to mistakes that cause financial or personal harm to clients. All insurance agencies should carry the appropriate errors and omissions (E&O) coverage. It may help them mitigate these risks.
All agents need E&O coverage. However, new agents may face a higher risk of making mistakes that harm customers. Take a look at how E&O insurance coverage may help protect the risks new agents may pose to your business.
What are E&O Risks
Errors and omissions risks result from a professional mistake on the part of an employee. This mistake may cause serious financial or asset harm to the affected clients. For this reason, the client might sue the business for the damage related to financial losses.
Let’s look at an example. Because of relative inexperience, perhaps a new agent issues policies that do not contain insurance levels a bank, state or other party requires of the policyholder.
This may mean that clients face losses for which they do not have adequate coverage. They might even face penalties because they didn’t have appropriate insurance levels.
The business needs its E&O coverage to reduce the risks this new employee may cause to the business. The harmed client could then sue the agency because of the mistakes of the new agent. You might be able to use these policies to pay restitution or other legal fees associated with the claim.
Reducing New Employee Risks
It is understandable that a new agent may pose extra professional risks to a business. It takes everyone time to learn their trade, so mistakes might be common. This is why E&O coverage can help protect a new agent when professional accidents occur.
Nonetheless, there are other steps that an agency may follow to reduce new employee risks:
- Maintain a professional hiring practice. This ensures agents with the proper qualifications join your team.
- Provide additional training and induction to all new employees. All employees should know proper company processes.
- Utilize appropriate oversight and managerial practices to monitor new employees. You might encourage mentoring, training reviews or other practices that can help you catch new employee mistakes.
Encourage performance reviews and continued education for all your employees, not just new agents. This can help agents stay on top of new developments in the insurance industry. It can also help agents learn tips to avoid potential mistakes.
Need E&O insurance for insurance agencies? Let U.S. E&O Brokers help you get a fast, free policy quote. Call us at (800) 460-6424 for assistance right now.