Errors and omissions coverage: an agent's starting point

E&O is the requirement agents treat as a box to check and later discover was a policy with terms. Two of those terms matter more than the premium.

What the coverage is for

Errors and omissions coverage responds to claims arising from professional services: an alleged failure to place coverage, an alleged misrepresentation of what a product did, an alleged failure to advise.

It is professional liability, not general liability and not a substitute for doing the work correctly. It exists because good agents still get claims.

Why carriers require it before appointing you

Most carriers make an in-force E&O certificate a condition of appointment, and they generally want to see the certificate itself with current dates and limits.

Expected limits differ between carriers. Check what each contract requires rather than assuming one policy satisfies every appointment on your shelf.

Claims-made is the term to understand

Most E&O policies are written on a claims-made basis, meaning the policy that responds is the one in force when the claim is made, not when the advice was given.

That makes continuous coverage important. A gap between policies can leave past work unprotected even though you were insured when you did it.

Ask about tail coverage before you need it

If you stop writing, change carriers, or retire, an extended reporting period, commonly called tail coverage, is what responds to claims made after your policy ends about work you did while it was in force.

Find out what your policy offers, for how long, and at what cost, while you are still insured. This is difficult to arrange after the fact.

Keep the documentation habit

The single most useful thing an agent can do for a future E&O claim is contemporaneous documentation: what the client stated, what you presented, what you provided, what was decided.

Notes written the same day carry weight. Notes reconstructed two years later during a claim carry considerably less.

Frequently asked questions

Is E&O legally required?

Requirements vary by state and by carrier agreement. Even where not mandated by law, most carriers require it as a condition of appointment.

What limits do I need?

That depends on your carrier agreements, the lines you write, and your own risk assessment. Check each contract's requirement and discuss limits with your E&O carrier.

What is claims-made coverage?

A policy that responds based on when a claim is made against you rather than when the alleged error occurred. This is why coverage gaps matter.

Does E&O cover intentional misconduct?

Generally no. Policies typically exclude intentional or fraudulent acts. Read your policy's exclusions carefully.

For licensed insurance producers. General educational information only, not legal, coverage, or compliance advice. Policy terms, exclusions, limits, and state requirements vary and can change. Read your own policy and consult your E&O carrier and your own counsel about your specific situation.

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