Are you worried that you're missing something? While errors and omissions insurance will help cover you if you have made a mistake, it's far better for your reputation and financial security to avoid making those omissions in the first place. What does errors and omissions insurance cover, and how can you ensure that omissions happen as infrequently as possible at your agency? Here's what you should know.
What is E&O Insurance?
According to Investopedia, E&O insurance is professional liability insurance for insurance agencies that "protects companies, their workers, and other professionals against claims of inadequate work or negligent actions." People who are in the position of providing professional services use professional liability insurance to protect against client claims. These claims may result in a settlement, or they may be unfounded. No matter what the outcome of the case might be, there will be legal expenses. E&O insurance can help you pay for those so that a client case does not bankrupt your business.
What is an Omission?
While you could get in trouble for something that you do, an omission is something that you did not do. It is a failure to act. For instance, if you fail to inform a client about an important piece of information, that is an omission. If you fail to ask for information, that is an omission. A failure to act is an action in and of itself, and you need to protect your agency from these failures.
For instance, according to Legal Match, "if the business professional made an error on a balance sheet, or if they omitted an important entry, the client may be seeking compensation if the mistake caused them losses."
Generally, the omissions covered are ones that do not cause bodily harm – rather, they are related to your professional field. For example, if you don't fix the broken front step into your agency and someone slips and falls, this is generally covered under your general liability insurance.
Preventing Omissions At Your Insurance Agency
How can you avoid the problems of omission at your insurance agency? These problems are often organizational in nature, and addressing them involves addressing the processes that you use to run your insurance agency. You can:
Work with employees to both streamline and understand the necessary details of processes at your insurance agency, such as bringing on a new client. Review these processes regularly to see what is and is not working.
Conduct regular reviews and cleanups of your insurance agency's data to see how well your processes are working.
Gather feedback from clients about their client experiences to find ways that you can do a better job of managing client communication, privacy, and data.
Look for a keen eye for detail when you are hiring, and have regular staff reviews.
Develop a process for addressing staff failures so that you can get on top of problems without feeling awkward or sidestepping issues.
With these practices in place, you'll start to identify and address any patterns of omission that might exist at your insurance agency.
At you looking for the benefits of an insurance agent association? Talk with American Agents Alliance today. We offer numerous membership benefits including excellent E&O insurance.