Errors and Omissions insurance for insurance agents is a key piece of protection whether you are an independent agent, or part of a larger agency. Even though insurance agents are well-versed in the specifics of the insurance world, there are important and unique risks associated with selling property and casualty insurance that even veterans in the industry could miss.
What Does E&O Insurance for Insurance Agents Cost?
Errors and Omissions insurance cost varies widely across industry, even for businesses of the same size. Insurance agents know that more professional risk means higher E&O insurance costs. But what is the cost of the risk associated with helping other businesses asses the cost of their risks?
As an individual property and casualty insurance agent, you should expect your annual E&O insurance cost to be between $600 and $1,500. If you are buying coverage for an agency as a whole, then your premium would likely be between $1,000 and $2,000 a year.
Important Tip #1: When applying for errors & omissions insurance for insurance agents together as an agency, you need to designate the number of insurance professionals being covered. Update your insurance carrier if you take on more people.
When Do I Need E&O Insurance as an Insurance Agent?
The nature of an insurance agent’s work increases the errors and omissions insurance cost in a roundabout way. If you were a hairstylist, for example, you might be able to operate for a few months without any professional liability coverage. Afterall, if no one has threatened to sue after a haircut gone wrong, then the likelihood an old customer will come back months later and file a lawsuit is very low.
But the mistakes an insurance agent might make are not nearly as visible. They may go unnoticed for close to a year. In that case, waiting on getting E&O insurance could be the difference between being covered, or being on your own.
Important Tip #2: Most E&O insurance policies for insurance agents do not cover all the active policies you wrote before getting covered. Therefore, it’s highly recommended that you get insured before any policies are written.
Agents can also be hit on the other end as well. When you terminate your E&O policy, any coverage for professional lawsuits is over. Even if a policy you are later sued over was written while you had coverage.
Important Tip #3: It’s a good idea to keep your E&O coverage going for a full year after you cease operations as an agent, in case any of the active policies you brokered at the end of your operations become issues before they expire.
And as any insurance agent knows, the best way to make sure you are totally protected is to speak with an expert on the subject.