Does your insurance business have E&O insurance? If not, you should. E&O insurance gives you some protection against legal costs if your staff make errors or omissions that cause problems for your clients. It also protects your business against poorly-founded lawsuits that clients could bring to your company.
If you want to protect your insurance agency on an ongoing basis, you need to make sure that your insurance is up-to-date. How long does E&O insurance last, and how often should you review your policies and practices around your E&O insurance?
Do You Still Need E&O Insurance?
As your insurance comes up for renewal, you might wonder whether you actually need it. After all, you haven't used the insurance. However, according to the Insurance Journal, "even with the best employees and the best risk management practices in place, mistakes will be made. No one is perfect." Just because you haven't used your E&O insurance doesn't mean that your employees are going to continue to be error-free this year – or that an incensed client won't take you to court.
When Should You Get E&O Insurance?
You need to get E&O insurance as soon as you can. The reason is that you will only have coverage for activities that occur after you acquire the insurance. If your employee makes an error that's not discovered for a year or two, and that error occurred prior to the start of your E&O insurance, chances are it won't be covered.
Renewing Your E&O Insurance
Like other insurance policies, you generally need to renew your E&O insurance annually. This is to ensure that you have an opportunity to update your insurer on any changes that you have made to your business or your policies.
If you miss your renewal date, you generally have a month of grace to renew your policy. However, you can also take the step of renewing early. This gives you more time to examine your options, such as the cost of your current E&O insurance plan and other insurance plans. This also allows you to prevent an uncovered claim. If you go for two months without renewing, then you could have a serious problem if your employees suddenly make a mistake and you realize that it is not going to be covered by insurance.
Renewing early also gives you time to update and review your policies at your insurance agency. Have you put more stringent requirements in place for data use and safety? Have your client intake procedures changed so that you are less likely to make a data entry error? Changes in your policies could impact your insurance, and renewing early allows you to give yourself ample time to discuss any of these policy changes with your insurer.
Are you trying to find high-quality, convenient, and low-cost E&O insurance? At American Agents Alliance, we offer affordable E&O insurance for independent insurance businesses like yours. Contact us today to learn more about how we can help you access E&O insurance and many other membership benefits.