Errors and omissions (E&O) insurance can be a vital financial safeguard for insurance agencies, protecting them from potential claims of negligence or inadequate work. In the complex insurance world, even the most diligent agents can make mistakes or overlook critical details. E&O insurance can offer a financial safety net, covering a range of common claims arising from these errors. From inaccurate coverage assessments to misrepresentation of policy terms, this type of insurance can help ensure that agencies can manage risk effectively and maintain their operations smoothly. Understanding these common claims is essential for any insurance agency looking to protect itself and its clients.

Common E&O Insurance Claims

The following are some typical claims typically covered by E&O insurance:

• Inaccurate coverage assessments—One of the most frequent claims arises when an insurance agent fails to assess a client’s coverage needs accurately. For instance, if an agent underestimates the value of a commercial property, the client may face significant financial losses in the event of a disaster.

• Failure to disclose policy limitations—Agents are responsible for ensuring clients understand the limitations and exclusions of their policies. If an agent neglects to inform a client that their homeowners policy does not cover flood damage, the client may file a claim against their insurer if they suffer flood-related losses.

• Neglecting to update policies—As clients’ circumstances change, their insurance needs evolve. Failing to update policies to reflect these changes can lead to significant issues. For example, if an agent does not update a life insurance policy to include a new spouse as a beneficiary, it can result in legal disputes and financial losses for the client.

• Misrepresentation of terms and benefits—Misrepresenting the terms and benefits of a policy is another common cause of E&O claims. If an agent incorrectly assures a client that a specific medical procedure is covered under their health insurance, and it turns out not to be, the client may incur substantial out-of-pocket expenses and file a claim against the agent.

• Failure to maintain appropriate coverage—Clients trust agents to monitor their insurance coverage and provide appropriate guidance. If an agent fails to procure the correct coverage and a loss occurs, the client may hold the agent responsible for the financial damages.

Learn More

Contact U.S. E & O Brokers to learn more about errors and omissions coverage.

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.