How to Get E&O Insurance for Insurance Agents

Errors and omissions, or E&O, insurance can protect insurance agents from a slew of financial risks, such as mistakes in their work or missing deadlines that affect client coverage.

Here’s how it works and what to know about getting E&O insurance for insurance agents.

E&O insurance is coverage that protects insurance agents if someone accuses them of making a mistake and sues or files a claim against the business. In general, errors and omissions insurance policies are claims-made policies, which means coverage must be in place at the time a claim is made in order for the insurer to cover it. If your coverage lapses, you’ll no longer be protected.

Learn more about what errors and omissions insurance does and doesn’t cover.

In general, businesses that provide services to customers for a fee should have E&O insurance. ​​Insurance agents commonly face the following risks (and more) that E&O insurance could help protect against:

• Failing or forgetting to obtain coverage. For example, you might forget about getting auto insurance for a client who later gets into an accident.

• Recommending the wrong coverage to a client. For example, your employee might tell a client that buying property insurance will mitigate a risk when workers' compensation insurance actually covers the risk.

• Administrative errors on certificates of insurance or other paperwork. Errors on documents required to fulfill policy requirements could delay or disrupt coverage.

• Failing to help a client settle a claim on a policy. For example, an employee may fail to return calls, fill out paperwork or answer questions correctly about a client’s insurance claim, leading to less or no payment from the insurer.

• Misjudging insurance risk on a client’s property. This could cause the client to underinsure, which could lead to significant financial losses.

Here are some simple steps to be aware of when getting an errors and omissions policy for your insurance agency.

1. Learn how much insurance you need. If you sell insurance as a side hustle, you may not need as much insurance coverage as an agent with 20 employees. Some insurers offer policies that protect you on a per-event basis rather than requiring a monthly or annual commitment.

2. Get several quotes and compare insurance plans. There are three main ways to get estimates from insurers: reach out to an insurance broker, shop via an online marketplace or contact individual providers on your own.

3. Purchase your insurance package and keep your policies current. Read the fine print on your policy so you know how and when you’re covered.

4. Stay on top of your coverage. You can set calendar alerts to remind yourself when it’s time to renew your insurance policy to make sure you don’t accidentally allow your coverage to lapse.

» MORE: How to get business insurance

The price of errors and omissions insurance can vary significantly depending on the policy you choose, the amount of coverage you buy, the size of your insurance agency, the number of people you employ and your location.

• If you sell insurance on the side, a quick online insurer like Next or biBERK could make sense.

• If you're just starting an insurance agency, consider a carrier that packages E&O with a business owner’s policy, such as The Hartford or State Farm.

• Check with an insurer whose policies you sell. If it's good enough for your clients, shouldn’t it be good enough for you?

As with any major decision, shop around for a few quotes from different insurers to make sure you’re buying the best plan for your unique needs.