Debunking Common Myths about E&O Coverage
Debunking Common Myths about E&O Coverage02.24.2014
1. I document all my
business transactions so I’m protected should a claim arise.
Although you may utilize a traditional or online filing system, many agreements or promises made regarding the sale of an insurance product are completed verbally, by telephone or in person. Often times, these conversations, or portions of the conversation, remain undocumented. As a result, a large number of E&O claims become a “he said, she said” scenario that can result in losses for an agent. In this instance, E&O insurance would help agents pay for legal or settlement fees associated with a claim, lawsuit and/or litigation.
2. E&O insurance is not necessary because I never make mistakes.
Agents with a perfectly error free business history have experienced claims “out of the blue” from clients for a number of reasons. Regardless of the whether or not the agent is at fault, the agent must respond to the claim and spend time and money resolving the claim. E&O insurance reduces the time, effort, and cost of dealing with a claim, allowing the insurance agent to continue focusing on selling policies instead of responding to a claim.
3. I no longer sell insurance so I will never have a claim brought against me in the future.
It is possible for a client to bring a claim against an agent even after the agent has retired. Many scenarios occur in which a client finds a coverage error or omission after the agent who sold the policy has retired or moved on to a different career path. Because insurance agents are always susceptible to claims, even after retirement, continuous E&O insurance protection is necessary to help reduce loss and mitigate costs associated with an E&O claim.
4. E&O insurance is too expensive and I probably won’t need it.
E&O insurance coverage can be affordable and comprehensive for insurance agents who know how to find the right policy for the business they conduct. By selecting insurance coverage that is customized to an agent’s individual needs, agents not only receive E&O protection, but they also only pay for the coverage they truly require. Agents can’t predict when or if they will experience a claim in the course of their career. Because of this, no agent can say with certainty that E&O insurance is something they will not need in the future. In fact, some agents experience an E&O claim for the simplest errors he or she had never realized making. As a result, E&O insurance becomes the most affordable way to stay protected from potential loss associated with E&O claims.
All information provided in this blog is for informational purposes only. The sources used are presumed accurate. CalSurance Associates, Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use and will not assume responsibility for any misguided information. No guarantees are implied.
Written by CalSurance Team Published February 2014