Insurance agents, just like other specialists, are professionals that offer services based on their experience and expertise. Offering this service comes with a wide range of risks.
General liability likely won’t cover you or your agents if a claim is made based off of professional negligence.
Professional Negligence for Insurance Agencies
Professional negligence refers to mistakes a professional can makes in their field that cost clients money. Insurance agents have a unique position in advising and selling certain policies to their clients. Whether your insurance agency focuses on auto insurance, life insurance or SR-22s, your agents are in a position to help clients or, in unfortunate cases, hinder them. Mistakes on a policy can leave clients with gaps in coverage or paying too much for insurance. Even further up the line through an insurance agency, issues of negligence in billing can also cost clients money.
To protect against these claims, insurance agencies need errors and omissions insurance (E&O insurance). Also known as professional liability insurance, this insurance helps cover claims concerning professional negligence. Professionals that utilize this type of insurance include lawyers, medical experts, contractors, technology professionals, real estate agencies, consultants and accountants. It can help with the losses or damages incurred by the incident as well as legal fees if a client decides to sue.
How Much Does Errors and Omissions Insurance Cost for Insurance Agencies?
As with most insurance policies, the cost of E&O insurance depends on a variety of factors, some of which may be out of your control. Common factors include
- Size of the agency
- Industry
- Location
- Claims history
- Credit score
- Experience of the business
Agencies that have been around longer with a history of few claims will generally pay lower E&O premiums. Only some states will consider the insured’s credit score when calculating the cost of your agency’s E&O policy, but it’s still recommended that you attempt to raise your credit score by paying off debts and bills in a timely manner.
Different industries face different amounts of professional liability risk, and thus pay more or less in E&O insurance. Insurance agencies can be held liable for large amounts of money due to professional negligence, but this industry isn’t seen as risky as, say, the medical industry. In the medical industry, E&O insurance is known as medical malpractice insurance, as it helps with acts of medical mistakes that can cause monetary and bodily harm.
ALSO READ:Determining Your E&O Insurance Requirements