The below information will help familiarize you with what Errors & Omissions (E&O) insurance is, how it protects you when a covered claims is filed against you by one of your clients and ways you can reduce your E&O exposures.

What is Errors and Omissions Insurance (E&O)

E&O Insurance is designed to cover the professional services rendered by a licensed insurance agent.

E&O Insurance specifically covers you as an insurance agent in the event of an error or omission made while servicing and/or selling insurance products

Is E&O Necessary? You decide...

Statistics show that 1 in 7 insurance professionals will be named in some type of E&O claim at some point in their career. Even if the agent is not at fault, defense costs can be significant and without the proper E&O coverage, the insurance agent will be paying the cost to defend claims out of pocket (Tillinghast Survey)

What is a Claims Made and Reported Policy?

E&O Insurance policy forms are often referred to as claims made and reported. This type of policy requires that claims and potential claims be reported during the policy period that you first become aware of the claim or potential claim or during any Extended Reporting Period, if applicable.

What is a Prior Acts Retro Date?

A prior acts retro date is one of the most important elements to understand when securing E&O coverage. Prior acts coverage defines how far back in your professional career that your E&O coverage will extend. Typically, E&O policies will provide prior acts coverage as far back as you can provide evidence of having maintained prior, continuous E&O coverage.

What if I have a gap in coverage?

It is extremely important that you maintain your E&O coverage with no gaps. If you allow a gap in your E&O coverage, even by 1 day, you could ultimately lose years of prior acts coverage.

What is an Extended Reporting Period (ERP)

An extended reporting period, also referred to as tail coverage, is to provide some degree of E&O coverage to an agent who has retired from the business, becomes disabled or deceased. Instead of purchasing E&O coverage year after year, an agent can purchase an ERP. The length of the ERP available depends on the E&O policy and can range from one year to unlimited. The ERP allows the agent to extend the period in which claims can be reported. An ERP will NOT cover new business activities; rather it only addresses claims that arise after the insured's prior acts retro date and before the date an agent retires, becomes disabled or is deceased.

When should a Claim be Reported?

The best defense against a claim is an early defense. Any claims or notices of potential claims must be reported during the policy period that the agent first becomes aware of them. The insurer has the right and duty to assign the counsel. The agent should not admit liability and should only discuss the claim with the E&O representative.