WEDNESDAY, SEPTEMBER 16, 2020
Commercial insurance agents must offer their customers a wide range of policies to offer them the most effective policy options. As an agent, many people will rely on you to help them choose the right coverage options. Your challenge is to help them build up standard coverage to include the specialized protection that they specifically need. When helping your client build out their liability insurance package, one of the options you might need to recommend to them is errors & omissions (E&O) coverage. Here’s why you should do so. 
Understanding Liability Insurance
Every business needs liability insurance because it helps them address the losses they might accidentally cause to other parties, such as their customers. Most businesses start their coverage with general liability coverage, which will pay for third-party bodily injuries, property damage and similar losses. With the benefit of coverage, a business can pay for these losses without having to suffer a significant financial loss. Therefore, they can better ensure their own long-term stability.
Adding Errors & Omissions Coverage to Liability Portfolios
Coverage for errors & omissions is not often included as part of general liability insurance. However, it is essential coverage to have for many professional businesses. This is coverage that might help a business that offers professional services or advice, such as lawyers and CPAs.
In these businesses, a representative’s advice or services might cause clients a significant financial loss should the professional make a mistake. As a result, the client might sue or demand compensation from the business because of the loss. E&O insurance can include the requisite protection against these risks. It can repay the harmed customer for their losses and help the business cover the legal costs of those losses.
Many professional service providers might wonder why they need this coverage. The answer is quite simple: it provides coverage for a unique risk that might not have coverage under a general liability policy.
Under general liability coverage, your policy will usually pay for only property damage or bodily injuries to others. However, professional mistakes or negligence might not cause these physical injuries. Instead, they might cause monetary losses, and as a result the client could suffer a significant loss. The client might blame the business as a result, and the ramifications could hit the business hard.
By offering them E&O insurance, you’ll enable your clients to be able to respond to potentially devastating claims resulting from their mistakes. Therefore, it is important to help them understand how important it is to their overall financial security. As a result, they’ll be able to make decisions confidently, knowing they have protection in case of mistakes. You can often add this coverage as an endorsement to your general liability policy, or you might buy separate coverage to supplement this protection.
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