What is Agents
WHY YOU NEED IT
As Insurance Agents, our profession is about advising customers and clients about risk and how to handle it. One of the ways that risk can be handled is through insurance. Insurance is the transfer of risk to another entity, usually to an insurance company.
We sell insurance. We owe it to our customers and clients, and to ourselves, to have a good understanding of it. However, we also have businesses to run and families to feed. Therefore, sometimes we do not have time to get a complete understanding of the insurance policies that we sell, or we sell several types so that the lines get blurred. When that happens, we can do a disservice to our customers and clients.
HOW IT WORKS AND WHAT IT DOES
If one of our clients makes a mistake that causes financial harm to another, and is not properly insured due to our fault, the client may look to us to take care of that harm. This is especially true if the insurer that we placed the client with denies the claim. Essentially, because of the mistake, we become the “insurer” for the claim. The basis of responsibility may be stated in terms of negligence, breach of contract, or both.
Negligence is the failure to act in a way, or attain a standard of care, that a hypothetical “reasonable person” would attain under similar circumstances. The “reasonable person” is one who has essentially the same experience and training as we do. “Breach of contract”, in this contest, means that we promised to help the client transfer risk to the insurance company but failed to do so. That is why it is called “Errors and Omissions” insurance. Importantly, the customer or client has to prove these things and also, that the client suffered damages as a direct result of our actions or failure to act.
An understanding of agent’s E&O Insurance is critical for any insurance agent. It is a form of “malpractice” insurance. It is separate and very different from Commercial General Liability insurance, because Agent’s E&O covers the insurance professional in his/her/its activities as an insurance professional. Commercial General Liability insurance does not cover professional liability claims and furnishes no protection for you for those types of claims. You are risking you own assets, present and future, if you do not have this kind of coverage.
Agent’s errors and omissions coverage provides several benefits. Some include:
The insurer investigates the claim at its own expense. This involves an adjuster taking statements, assessing that which the agent did or did not do in servicing the customer or client, and evaluating claimed damages. The adjuster also assesses whether the damages that may have resulted, directly arose from the agent’s action or inaction. This is called “proximate causation”. It is very important that the agent cooperate fully with the insurer in this process.
If the insurer determines that the agent was negligent or breached the contract to obtain coverage, and that damages resulted, it will attempt to settle the claim upon the best possible terms without risking a lawsuit. This may or may not be possible. The insurer has an obligation to you to settle within policy limits if that can be done. Sometimes the policy provides that you, as the insured, have to approve a settlement. Some policies also provide that you have to contribute a certain amount to the payment of the claim; this is similar to a deductible.
If the claim cannot be settled and you get sued, the insurer has an obligation to defend you. In general, this involves hiring and paying a lawyer to represent you in the lawsuit. It is critical that you cooperate and work with the attorney in the defense, attend depositions, and otherwise comply with all directives. The failure to do so can jeopardize your defense and coverage under the policy.
Agent’s E&O Insurance coverage can be purchased as a stand alone policy or as part of package. The package can include General Liability. Commercial or Business Property coverage, and the standard BOP form. Remember though, that E&O coverage is needed to protect you from liability in your activities as an agent.
E & O Premium Rating / Pricing
An Agents Errors and Omissions insurance premium rate is based primarily on three factors.
1. The agents annual premium volume.
2. The agents experience in writing the lines of business he or she sells.
3. Previous claims history (The frequency of prior mistakes).
In general, The more volume production, the greater the likelihood of making a mistake. Likewise, the more experience an agent has in his line of business the less chance of a mistake.
HOW WE CAN HELP YOU
We use our experience and expertise in the insurance business to bring insurance consumers together with respected insurance providers so that the providers compete for your business. We work with you and them to get the best coverage at the most affordable cost.
You may submit your insurance needs to us for evaluation and to get an online quote using the button above. We will work with you to tailor a program that meets your needs and fits your budget. Whether you need Professional Liability coverage, Commercial Business coverage, Equipment, Inventory, or even Commercial Auto insurance, we offer our expertise and personal attention