Do insurance agents need insurance? It might seem like an insurance agency would automatically secure the right insurance for their business, but that's not always the case. Small and large insurance agencies require insurance, including E&O insurance for insurance agents.
Protecting Your Small Business
If you are advising a small business client, what would you tell them? You'd perform a risk assessment, examining the potential risks and insurance needs of that business. You need to do the same for your agency.
You'd let any small business know that they need to cover their building, equipment, signs, and furniture in the event of a natural disaster or theft. Your business needs that same coverage. You also need to decide whether or not to purchase insurance such as flood insurance, if that's a concern in your area. You'll need to determine what kind of business interruption insurance you'll need to protect against theft, fire, or disasters interrupting your normal business proceedings.
Coverage For Your Employees
No matter how low-risk your work seems to be, you need to make sure that your employees are covered by insurance as well. Worker's compensation coverage isn't just for those who climb trees or wash windows for a living. Someone could fall while carrying a cup of coffee in the office. Chronic strain injuries such as carpal tunnel syndrome or pulled muscles can happen even in a relatively sedentary workplace.
Where do you store your clients' information? That information can be valuable to thieves. If you store information online and your computers are breached, your business could be held liable for loss of client data. Data breach insurance helps protect your insurance agency against data loss.
Professional Liability Insurance
While you put processes into place to avoid them, you make mistakes. Your employees make mistakes. Sometimes, those mistakes have consequences that can be far-reaching and make a big impact on your insurance agency. According to Entrepreneur Magazine, liability insurance or E&O insurance for insurance agents "covers a business against negligence claims due to harm that results from mistakes or failure to perform." Forbes adds that "your general liability policy does not provide this protection, so it is important to understand the difference."
If one of your front desk staff fails to ask a key question or an insurance agent fails to let a client know about an exclusion on an insurance policy, your clients could sue your agency for these failures. If you make a spelling error that sends a client's insurance renewal papers to the wrong address and the client is left without coverage, that could have severe consequences for your client and your agency.
You don't even need to make a mistake to be sued by a client. If a client feels that you've made an error or omission, that individual could cost your agency in legal fees before you finally reach a settlement or judgment. While you still need to be scrupulous in your dealings with clients, E&O insurance allows you to work with the assurance that if you make a mistake or are accused of making a mistake that hurts your clients, you have insurance to cover your legal fees.
At American Agents Alliance, we're here to support your growing insurance business. Turn to us to secure key products to facilitate your business growth, such as E&O insurance.