Your business is thriving. You've built up a steady clientele, and your clients are happy with your service and the quality of your insurance products. Suddenly your phone rings, and one of your clients informs you of a claim he'd like to file on his auto policy. The problem is, he came by your office a few weeks ago to endorse a new automobile onto his policy, and you issued him a new ID card, set the endorsement aside, and neglected to actually endorse it onto the policy and communicate the endorsement to the insurer. In this situation, if you had errors and omissions (E&O) insurance, which covers negligent acts or omissions, you could rest assured that your negligent act would be covered by your E&O insurance carrier.
What is E&O Insurance?
E&O insurance covers you or your company in the event of a negligent act or omission. E&O insurance is also known as malpractice insurance, and it does not cover intentional acts. Most E&O insurance policies will cover the costs associated with any errors or oversights as well as the hefty costs of lawsuits. Even though many lawsuits in this situation turn out to be groundless, the costs of fighting the lawsuits could do some serious damage, especially if you have a small agency. When a client approaches you with a lawsuit due to an error that you may or may not have committed, your E&O insurance will take care of it.
Who Needs E&O Insurance?
Any professional that provides services for a fee should have E&O insurance, especially any doctor, lawyer, accountant, architect, chiropractor, or other profession that can affect the health and safety of the populace. Accidents and slight errors are all too common in those fields. Although these are the most obvious and publicized careers that need protection against liability, they are not the only ones.
When Should You Buy E&O Insurance?
E&O insurance should be purchased before the incident. It’s not too late to purchase one now, however it will not cover the costs of past misdeeds; it will secure your agency against future negligent acts or omissions. Errors and omissions insurance is worth the peace of mind it brings, and it protects you and the agency that you are working so hard to build. As a P&C insurance agent, you have worked too hard to leave things to chance, so make sure you always have an E&O insurance policy in place to protect you.