How to Minimize Damage to Your Insurance Agency Caused by Errors and Omissions

No matter how careful and conscientious you and your employees are, something is eventually going to go wrong. Everyone makes mistakes, and it is crucial to think about what could happen to your company if you are held liable for one of those mistakes while providing service to a client. Many losses due to errors and omissions (E&O) are not covered under a general liability policy. Insurance agents are vulnerable to significant liability risks as they dedicate their time to providing coverage to customers. There are several steps that an agent can take to reduce the risk.
  • Purchase targeted E&O insurance for insurance agents - look for insurance relevant to your position in the agency. Find a product with high limits and coverage for independent contractors, insolvency, innocent insured and contingent bodily injury or property damage
  • Document all communications - Keeping written records of all business correspondence and phone calls will prevent a he-said she-said situation where a disgruntled client misremembers the details in his or her favor. Problems can arise when a customer and agent have developed a casual relationship over time and the agent no longer details each conversation.
  • Respond to all correspondence - If you receive an email or letter that is inaccurate but do not take the time to respond, there could be an assumption that you agree with the points presented in the document and could lead to E&O claims.
Putting strong E&O policies into place is important. Being diligent about record keeping and responses and purchasing E&O insurance for insurance agents can also help mitigate the risk.

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