You are an insurance agency, so it’s probably obvious to you how important it is for you to do your job correctly. After all, if you make mistakes or fail in your duty, then it could be your client who suffers. They could, often justifiably, blame you for their losses, and they might expect compensation as a result. This significant operating liability therefore needs the security provided by quality errors & omissions insurance (E&O coverage).
Consider the benefits of E&O coverage, and the situations where it can help you out. When it comes to your company’s professional services, you don’t want to leave anything to chance. So, let this coverage be a safety cushion for times when mistakes happen.
What is E&O Insurance?
A business’s liabilities are the things that it is responsible for. In a general sense, your insurance agency’s liabilities include delivering quality products to your customers. Unfortunately, the risk exists that despite your best efforts, you will make a mistake that does the client harm.
When it comes to bodily injuries or property damage that you might cause a client, you will need general liability insurance. However, there are also professional mistakes that you might make which could cause a client financial harm. In these cases, you will need E&O insurance.
E&O coverage was created because some businesses offer professional services which, when done negligently, could cause a problem for a client. Insurance agencies are one of these businesses. If their mistakes cause a client harm, then they will likely have to pay up. In some industries, E&O insurance is called professional liability insurance or malpractice coverage.
Why Does My Agency Need It?
The best way to illustrate the importance of E&O coverage for your agency is with a real-world example.
Suppose that one day, a client buys homeowners insurance and requests to schedule one of their pieces of jewelry on the plan. By scheduling the item, they will be able to specifically insure that piece for an appropriate value.
However, due to a simple mistake, you forget to include the endorsement on the policy, and don’t catch the error. No one notices until the client calls one day to inform you that this piece has been stolen, and that they want to file a claim for it. Unfortunately, when you tell them that they don’t have this coverage, it will be easy to understand why they might become irate, demand compensation from your company for their loss, and even sue you over your failure.
You of course did not intend for this mistake to occur. However, the simple fact that it did makes you responsible for the client’s losses. Under the circumstances, you can turn to your E&O policy for help. The plan specifically addresses your professional mistakes, and under the circumstances can provide the impacted customer with an appropriate settlement, while covering your own legal expenses too.
Consider E&O insurance an imperative part of your business insurance portfolio, and work with your own commercial insurance provider to determine exactly how to tailor it to your agency’s advantage. In the end, you will be very glad you never went without coverage.
Also Read: E&O Insurance for Insurance Companies