Even the best, most careful insurance professionals make mistakes or provide incorrect advice to clients. The errors can result in client lawsuits that can cost them six figures or more in legal and settlement expenses. A single lawsuit is often enough to put an insurance agency out of business.
It’s important for insurance agents to get adequate errors and omissions (E&O) insurance coverage to help pay expenses if they’re ever sued.
- How much does E&O insurance for insurance agents cost?
- What factors impact E&O insurance cost for insurance agents?
- How can I find affordable E&O coverage for insurance agents?
- Where insurance agents can get cheap E&O insurance quotes online
- What is errors and omissions coverage for insurance agents?
- What does E&O insurance cover?
- Who else should get E&O insurance?
- What other types of insurance do insurance agents get?
- Best E&O insurance companies for insurance agents
How much does E&O insurance for insurance agents cost?
The average cost of an E&O insurance policy for an insurance agent is around $65 per month or $780 per year. That is quite reasonable considering how much protection it offers. However, you could pay more or less for this coverage depending on your risks and other factors that we are discussing in the subsequent section.
The average cost of E&O insurance varies across insurance types as well. Below are the details:
|Insurance agent types||Average E&O insurance costs|
|Life insurance agents||$45 per month|
|P&C insurance agents||$78 per month|
|Registered Investment Advisors (RIAs)||$165 per month|
These are just the averages. Your rates will be different. Be sure to shop around with a few companies or work with a broker like Simply Business or CoverWallet to compare several quotes in one place to find the cheapest one for you. To start your comparison shopping, get quick online quotes from NEXT and Thimble to have a good sense how much it would cost you.
What factors impact E&O insurance cost for insurance agents?
E&O insurance for insurance agents varies depending on different factors. Below are the main ones:
- Amount and level of coverage
- Claims history
- Type of insurance work you do
- Business size
- Day-to-day operations
How can I find affordable E&O coverage for insurance agents?
Here are some tips to help you get the coverage you need at a fair price:
- Shop around for the best value. Get quotes from a few insurers and compare them to find the right coverage for you at a reasonable cost.
- Take advantage of discounts. If they’re not offered to you when requesting a quote, ask about them, whether you’re buying online or through an agent.
- Keep your insurance record clean: your claim history has a significant impact on your E&O insurance cost. The cleaner your claim record is, the cheaper your rate is
- Avoid to have your policy lapse: if you have your policy lapse and restart again, it is a bad sign to insurance companies and you may see your rates increase as a result.
These steps will help ensure you’re not paying too much for your E&O insurance coverage.
Where insurance agents can get cheap E&O insurance quotes online
Getting online quotes is a good way to start your comparison shopping to find a cheap E&O policy for insurance agents. Below are some carriers and brokers offering E&O insurance quotes online for insurance agents. You can usually get multiple quotes online from the brokers.
- Carriers: NEXT, Thimble, Hiscox
- Brokers: Simply Business and CoverWallet
What is errors and omissions coverage for insurance agents?
Errors and omissions insurance helps cover the cost lawsuits, including legal and settlement expenses, if an insurance client claims your advice was inaccurate or your insurance-related services didn’t meet their needs. In short, E&O insurance covers business-related mistakes and oversights you are sued for, whether you’re guilty of them or not.
An accusation of professional negligence, mistakes, or an unfulfilled promise related to your insurance services could result in a client taking you to court. As an insurance professional, you know how expensive a lawsuit can be. Having adequate professional liability insurance coverage can protect your business from legal claims by paying for your legal expenses, whether the lawsuit is legitimate or frivolous.
What does E&O insurance cover?
A professional liability policy covers:
Even the most by-the-book insurance professionals — from adjusters to insurance agents — make on-the-job mistakes that they could be sued for. If a client sues over a mistake or an oversight, it could cost you six figures or more in legal and settlement expenses. Errors and omissions insurance will cover many of these costs.
Failure to deliver insurance services as promised
Insurance agents connect their clients with insurance providers. Now and then, those connections break down, and insurance coverage and services aren’t delivered to meet the client’s expectations. If your business fails to perform services your clients want, you could face a lawsuit.
E&O insurance for insurance agents can help pay for your legal fees, including court-ordered judgments or settlements worked out before going to court.
Accusations of professional negligence
Clients sometimes accuse insurance professionals of negligence. For example, a client could claim that the advice you provided caused them to purchase insufficient coverage. The client makes a claim on the policy only to find the money provided by the insurer is nowhere near enough to pay for the loss. When the client sues to recoup their monetary losses, professional liability insurance will cover your legal expenses, including the cost of hiring a lawyer to represent you.
Why is it important for insurance agents to have an active E&O policy?
Professional liability insurance is typically a claims-made policy. You can only receive benefits if your policy is active both when the incident happened and when the claim is filed.
You’ll need to maintain this insurance if you retire or switch to freelancing from a full-time insurance job if you want coverage for your past work.
Who else should get E&O insurance?
In addition to insurance agents and brokers, actuaries and claims adjusters, should consider this protection too.
Besides insurance professionals, real estate professionals such as real estate agents, home inspectors, appraisers also should have E&O coverage. Public notary also needs to have this policy as well.
Financial professionals such as accountants and CPAs, financial advisors and investment advisors, and tax preparers also need this coverage
What other types of insurance do insurance agents get?
E&O insurance covers costs related to lawsuits related to mistakes insurance agents make when conducting business. However, it doesn’t cover everything. Insurance professionals should also consider purchasing:
- General liability insurance covers expenses related to customer injuries that happen on your business property, damage to your customer’s property when you visit their offices or homes, and advertising-related issues. Learn more at general liability insurance cost and the best general liability insurance companies
- Commercial property insurance pays for expenses related to damage and losses to your business property resulting from fire, weather events, and theft. Learn more at commercial property insurance cost and the best commercial property insurance companies
- A business owner’s policy (BOP) combines general liability insurance with commercial property coverage, usually at a lower price than purchasing the coverages separately. It also makes it easy and cost-effective to add on other coverages. Learn more at BOP insurance cost and the best BOP insurance companies
- Workers’ compensation insurance is required in most states for insurance businesses that have employees. It provides benefits when agents are injured for work-related reasons. It pays for medical care, disability expenses, death benefits in extreme cases, and more. Learn more at workers comp insurance cost and the best workers comp insurance companies.
- Commercial auto insurance helps cover costs related to injuries and property damage if you or an employee gets into an accident while driving for business reasons. Many insurance agents use personal cars to drive to meet with clients. A personal auto policy doesn’t cover accidents that happen when driving for business. Learn more at commercial auto insurance cost and the best commercial auto insurance companies.
- Cyber liability coverage helps insurance businesses recover from data breaches. Insurance agencies handle and store a lot of sensitive information and data, so this is essential coverage for them to get. Learn more at cyber liability insurance cost and the best cyber liability insurance companies.
Best E&O insurance companies for insurance agents
Hundreds of insurance companies offer E&O insurance for insurance agents. It can be confusing and time-consuming to find the best one for you. Here are our recommendations of the best E&O insurance companies for insurance agents for your considerations.
- CoverWallet: Best for comparing several quotes
- Simply Business: Best broker for finding low-cost coverage
- NEXT: Best for a great digital experience
- Thimble: Best for short-term coverage
- Hiscox: Best from a specialist, focusing on E&O insurance for a wide variety of professionals
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