When your insurance agency is looking for support for errors and omissions claims, you need to seek out E&O insurance. However, even with insurance, you will potentially have some financial responsibilities if you have to acquire a legal defense team or you need to pay for damages. These tips will help you navigate the world of E&O insurance deductibles.
Why Errors and Omissions Insurance for Insurance Agents Is Important
When you’re in the position of offering services to others, you need E&O insurance. This is because, in spite of your best intentions and practices, errors and omissions will occur. If clients are unhappy with the services that you have provided and feel that you have made errors that negatively impact them, they might sue your business for damages.
This can occur if a client feels that you failed to deliver a service, or were negligent, or have breached the contract, or that you have made mistakes that caused them losses. For instance, according to InsureOn, “If your business leaves work unfinished, it can interrupt your client’s business plans” or personal plans, and this could cause them to sue your business.
Costs of the E&O Process
If a client decides that your business has been negligent or has failed to deliver a service, the resulting legal process can be costly in two ways:
- You need to pay for legal services to defend yourself.
- You need to pay damages if your business is found liable.
While many of your costs will likely be covered if you have E&O insurance, in many cases, you will still need to pay a deductible.
According to The Balance, “Some E&O policies have two deductibles. There might be one deductible for defense costs and another for payment of damages if an agent is found to be at fault.” Some deductibles may be waived if the agent maintains files of documents required by the law and by the insurer.
Variations on E&O Insurance Deductibles
When you’re examining different options for E&O insurance, here are some variables to consider in your insurance search.
- Does the E&O insurance cover defense with or without a deductible?
- Is there a deductible for damages, and how much is it?
- What are the overall claim limits and agency limits?
- Is the deductible ever waived? How is this determined?
You also need to know exactly what your insurance covers. For instance, if your business is accused of discrimination, insurance won’t cover that. Knowing your insurance policy and deductibles will help you be prepared for the possibility of a client lawsuit.
Securing the right E&O insurance for insurance agents can be a challenge, but the American Agents Alliance is here to help. Through the American Agents Alliance, your insurance agency can find peace of mind when it comes to E&O insurance. We offer deductibles that apply to damages only, with a deductible waiver after participating in the program for three years. Take a look at what we have to offer: ask about our E&O insurance today.