Errors and omissions coverage is necessary for independent insurance agents and brokers. But do you know about the common exclusions often found in E&O policies designed for insurance agents? It’s critical to understand how your coverage works and the nuances of how exclusions are applied to protect yourself from risk.
Read more about E&O coverage, conditions, and common exclusions now, then review your own policy for specifics about your coverage.
Common Exclusions Found in Insurance Agent’s E&O Coverage
Every insurance policy has exclusions, including E&O policies. Here are some common exclusions to watch for:
- Dishonest, intentional, or criminal acts. Like most insurance policies, a typical E&O policy for insurance agents excludes dishonest, criminal, fraudulent, or malicious actions. While this exclusion is routine in most insurance policies, agents should be aware of it.
- Cyber losses related to data breaches. This type of loss is typically excluded under the E&O policy since coverage is granted under a cyber liability policy. Agents should review their policy for more cyber-related conditions and exclusions. Consider a specific cyber liability policy to secure coverage for losses related to data breaches and other cyber-attacks.
- Bodily injury and property damage losses. An agent’s commercial general liability policy extends coverage for bodily injury and property damage and these types of losses are excluded from most E&O policies.
- Workplace harassment, unlawful termination, and discrimination. These types of claims generally fall under the EPLI (Employment Practices Liability Insurance) coverage. Workplace claims are generally excluded from E&O coverage.
- Workplace injuries. Work-related injuries and illnesses fall under workers’ compensation coverage in most cases. Because coverage is afforded under another policy, it is excluded under the E&O policy.
- Losses arising out of ancillary services. If you provide additional services to your clients that don’t fall under typical insurance business, losses related to those services are likely excluded from coverage under the E&O policy. There may be coverage under other policies. If you perform other services that are not insurance-related, understand whether you have coverage or not for losses related to these services.
How Insurance Agents Can Manage Common Exclusions in Their E&O Policy
First, read your policy. This is basic advice you likely give all of your policyholders, and you should follow it, too. Read through your policy and pay particular attention to conditions and exclusions. As an agent, you already know the policy wording is critical to your coverage so take the time to read your policy.
Next, review the basics when it comes to E&O claims. Check out this helpful blog by the American Agents Alliance discussing ten procedural mistakes agents make that can lead to E&O claims. Attend training as part of your annual continuing education credits and talk about potential E&O exposures in your agency.
Finally, follow best practices and standard procedures for every interaction and with every customer. Document coverage conversations and make sure rejections are signed and in the file. Manage common exclusions in your E&O policy by knowing what they are and managing your communications and files accordingly.
While E&O coverage isn’t required for insurance agents, many agents decide to purchase the coverage to protect their agency and themselves. Additionally, some carriers require agents to carry E&O coverage before they can write business for the carrier.
Refresh Your E&O Coverage with the American Agents Alliance
Members of the American Agents Alliance can request a free quote for E&O coverage. If your policy needs a refresh, request your quote today. Join the American Agents Alliance today to access this and other valuable member benefits.
