Errors and omissions (E&O) insurance is a critical financial safeguard for insurance agencies, but many businesses may not be aware of possible coverage gaps, such as those related to allegations involving certain staff or contributors. While your agency’s E&O policy may appear exhaustive on the surface, it’s worth taking a closer look to verify that all parties who contribute to your business are adequately covered.
Sub-Producers and 1099 Agents: A Gray Area
Independent contractors and sub-producers often operate under different legal and contractual frameworks than full-time employees. Depending on how your E&O policy is structured, these individuals may or may not be automatically included in your coverage. Some policies may require that 1099 agents be explicitly named or endorsed, while others may exclude them entirely unless they carry their own E&O insurance. This can create a significant risk exposure if a claim arises from their actions while representing your agency.
Part-Time Staff: Not Always Fully Covered
Part-time employees can also fall into a coverage gray zone. While many E&O policies extend to W-2 employees, the definition of “covered persons” may vary by carrier. If your part-time staff are involved in client interactions, quoting or policy servicing, they could potentially trigger E&O exposure. Being certain that your policy includes all staff, regardless of hours worked, can help mitigate this risk.
What You Can Do
As an agency, you’ll need to take steps to verify that your E&O coverage is sufficient for your operations. When addressing potential gaps involving these situations, your business should consider the following steps:
- Carefully review the definition of “insured” in your E&O policy.
- Confirm whether part-time employees, sub-producers and 1099 agents are included or require separate coverage.
- Ask your carrier or broker about endorsements that may be needed to extend coverage.
- Maintain a list of all individuals performing client-facing or advisory roles, and make sure they’re included in E&O insurance.
Learn More
If your Houston, TX agency employs sub-producers, 1099 agents or part-time staff, it’s critical to confirm that they’re included in your E&O insurance. Contact us today to discuss your situation and address possible coverage gaps.
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.