Insurance agents and brokers rely on Errors and Omissions (E&O) policies to protect their businesses from potential claims. However, not all E&O policies are created equal.
The range of coverage can vary significantly, from comprehensive industry-leading policies to stripped-down versions with hidden coverage gaps. This eSpecialty Insurance blog post explores common pitfalls and considerations when selecting an E&O policy for insurance agents and brokers.
The Danger of Hidden Exclusions
The primary culprit in inadequate coverage often lies in specific exclusions buried within the policy language. What works for one agency may severely limit coverage for another. For instance, we recently encountered an agency specializing in a particular type of business whose existing policy included a provision that excluded 98% of their written business. By moving to a carrier with a comprehensive form, coverage was restored.
Top Considerations for Agents/Brokers E&O Policies
- Definition of Professional Services: Ensure the policy’s definition of professional services is broad enough to cover all your activities.
- Independent Contractors: If you use independent contractors, make sure the definition of “insured” includes them.
- Insolvency Exclusions: Watch out for absolute insolvency exclusions – there should be a carve-back for well-rated companies. This is particularly important in catastrophe-exposed territories like Florida and California.
- Laser Exclusions: Check for exclusions related to specific lines or classes of business you write, such as trucking and marine. In addition, look for exclusions pertaining to specific business models and trading partners.
- Coverage Extensions: Extensions for subpoenas, court attendance costs, and administrative proceedings can be surprisingly valuable.
- Pro-bono Work Coverage: Are pro-bono services or work for non-profits covered? Often, they are not.
Matching Policy to Agency Needs
The key to adequate E&O coverage lies in matching the policy to your agency’s specific needs and exposures. Hidden provisions can significantly impact coverage, making it crucial to thoroughly assess your exposures and seek comprehensive solutions.
Expert Guidance and Competitive Solutions
Given the complexity of these policies and the potential for hidden pitfalls, it’s advisable to work with experts like eSpecialty Insurance, who can assess your specific exposures and propose tailored solutions. With access to competitive market options, we can ensure you have the most comprehensive coverage suited to your agency’s unique needs at competitive rates.
While navigating the intricacies of E&O policies can be challenging, an expert can make it easy. Understanding these potential pitfalls is crucial for protecting your agency. By carefully considering these factors and seeking expert guidance, you can secure a policy that provides robust protection for your business without incurring significant costs.
About eSpecialty Insurance and Bob Sargent, Founder and CEO
eSpecialty Insurance was established to revolutionize the customer journey in specialty insurance. Bob is a founder and early-stage investor with decades of experience as an underwriter and broker addressing unusual, complex, and challenging exposures. He helps businesses to secure the most comprehensive insurance solutions at competitive rates.
Email [email protected] or call (435) 252-1077 to learn more.