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What is Errors and Omissions Insurance?

By  Senior Market Advisors  on September 27, 2020

One question that comes up a lot from many P&C agents is what exactly is errors and omissions insurance, and do I need it?

Errors and Omissions insurance is essentially coverage for any work of yours that was inaccurate, late, or never delivered. Another term for errors and omissions insurance is professional liability insurance. 

To adequately protect yourself from claims arising out of any errors or omissions to your work or the insurance policies you’re writing. Now you don’t legally need E&O coverage to practice in the insurance industry, but it is highly recommended. 

As an insurance professional or an agency owner, you understand the importance of protecting yourself in the face of adversity, so you probably understand why an E&O policy would be a smart investment.

Mistakes happen, nobody is perfect, so wouldn’t it be smart to get out in front of those mistakes by purchasing a professional liability insurance policy?

Do insurance agents need E&O insurance?

Health insurance, life insurance, and property and casualty agents don’t legally need E&O insurance to operate in the insurance industry.

Having it would be extremely smart if you’re an independent agent or an agency owner to own a policy. 

Professional services liabilities do exist, and in this sue-happy world, it is smart to protect yourself at all times. If you are selling insurance products to your existing customers, your job is to advise them on the harsh realities and uncertainties in this world and how to protect themselves adequately.

So while you don’t need this type of insurance policy to operate legally, it is very smart to get E&O insurance for life insurance agents and casualty agents.

Why You Need Errors & Omissions Insurance

Errors and Omissions insurance is essential to protect yourself from potential lawsuits and financial loss! When selling insurance programs, we rarely think about the possibility of being accused of negligence or lacking to fulfill certain promises and various other forms of insufficient promises. 

But again, mistakes do happen!

As a life or property and casualty insurance agent, we understand the importance of risk management and mitigating financial loss. That is what we do for a living! 

So when a claim comes around accusing you of negligence, are you prepared to pay for all of those defense costs and assume potential financial loss?

Of course not, that is why having an excellent E&O policy is so important for insurance agents when selling professional services.

What E&O Insurance Covers

An E&O program is used to cover professional liability. 

Meaning it covers you for any of the following errors and omissions you might have.

  • Work Mistakes and oversight
  • Undelivered Services
  • Negligence

When selling insurance products on behalf of an insurance company, mistakes happen! While it is essential to have general liability coverage as we all know, it is even more critical to have an E&O program in place to protect you and provide professional liability coverage.

Types of E&O coverage

When deciding what type of E&O coverage is right for you or your agency, there are a few different types of coverages to choose form. 

Negligence: Protects you or your agency from any actual or alleged errors when providing your professional services.

Defense Costs: Provides you with legal defense coverage to defend you in court when a claim is brought against you or your agency.

Copyright infringement: Can protect you for any damages or claims expenses brought against you arising out of copyright infringement.

While these are the three main types of errors and omissions coverage options, there is also a wide variety of different additional coverage to choose from. If you’re interested in seeing what other additional coverage options are available, please consult with a Zurich agent to see what the Zurich E&O insurance for life agents options is. 

We know that agency errors occur, so do your part in protecting yourself from any large claims brought against you!

How to Obtain E&O Coverage

If you’re an insurance agency or an insurance agent in search of an E&O insurance policy, you’re probably wondering where do I get one?

Insurance agents can submit E&O applications to most insurance companies. Most insurance companies offer professional liability coverage to agents or insurance agencies interested in protecting their liabilities.

Like we said before, mistakes happen; we highly encourage anyone selling insurance products to protect themselves from potential E&O lawsuits!

How much does E&O insurance cost for insurance agents?

As an insurance professional, we’re sure you’ve heard the age-old questions, “so how much is all this going to cost me?”

A wide range of carriers would be more than happy to provide agents and insurance agencies with an E&O application quote at no charge. 

The prices vary depending on the amount of potential risk as well as who you get your E&O insurance quote through, but on average, we see E&O coverages prices in-between $500 to $1000 annually.

Who has the cheapest E&O insurance?

There are many different options for getting the best price on your next E&O policy—some things to consider when buying is to buy early and do your research.

There are no down payment E&O insurance policy options available, and depending on who you choose to get insurance through, you can get an affordable price!

The cheapest E&O insurance for insurance agents isn’t as black and white as it seems as prices are constantly changing depending on who the carrier is.

We encourage you to do your own research and compare errors and omissions insurance prices from all major carriers. There is a wide range of websites and resources that allow you to price shop and compare the carriers side by side.

What You Should Know Before Buying E&O Insurance?

Independent agents be wary that there are providers out there advertising for free E&O insurance.

There is no such thing. But many carriers out there writer great policies for affordable prices, and we encourage all of our independent agents to seek out and find those carriers!

The Best E&O insurance Providers for insurance agents

Many insurance carriers provide E&O coverage for insurance agencies and provide coverage for a very affordable price. But the best E&O insurance carriers who offer professional liability coverages are as follows:

  • Zurich
  • Hartford
  • Travelers
  • Embroker
  • AIG
  • CAN
  • Liberty Mutual
  • Progressive 

As an insurance professional, it is essential to have errors and omissions coverage, but it is just as important to do your research when deciding who to get coverage written through!

How to Avoid an E&O Claim

The best way to avoid E&O claims is to set up routines and processes that you regularly follow to ensure you are doing this right every time.

Other things you should be doing to mitigate the chances of an E&O claim are as follows:

  • Monitor claim activity
  • Fully explain coverages
  • Share policy changes with insured
  • Checks and balances when doing administrative work

By putting these practices to work, you can make sure you don’t find yourself in the middle of a painful and draining lawsuit!

Top Causes of Agent E&O Claims

Nobody is perfect, and we understand that insurance professionals make mistakes.

But as insurance agents, we also understand the importance of mitigating risks!

The most common E&O claims examples and mistakes to avoid when conducting business are as follows:

-Administrative Errors

-Failure to identify exposures

-Failure to share policy changes

-Failure to send most accurate client information to the insurer

-Failure to correctly explain coverage

Make sure to avoid these mistakes when conducting business, so you don’t find yourself in the middle of an insurance agent’s errors & omissions case!

What to do when faced with an E&O claim?

 Things you need to do when faced with an E&O claim


  • Report claims in writing to your carrier
  • Make sure you’re aware of the language that is in your E&O policy.


  • Don’t admit liability. Even if you are responsible, be sure to speak about the alleged error until you’ve reported it to you carrier
  • Don’t pay any expenses without your errors and omissions carriers permission
  • Don’t attempt to settle, without carriers permission or involvement of the E&O claim

Other insurance policies for insurance agents to consider

Other types of insurance coverages that commercial property insurance agents and agency owners should consider are as follows:

  • General Liability Insurance: If you’re an insurance agent or broker, you understand the importance of protecting yourself from potential lawsuits. That is why it is essential to protect your business and cover losses or expenses when property damage or injuries occur.
  • Employment-Related Practices Liability: As your agency grows, you’re hiring and firing more people, as does your potential risk for lawsuits. An employment-related practices liability policy will help you mitigate the risk of any lawsuits brought your way via discrimination or harassment of an employee. This includes wrongful termination, breach of contract, racial discrimination, and age discrimination of current, potential, and past employees.
  • Cyber Liability: You’re more than likely, housing important customer information for any and all of your clients. If something were to happen to that sensitive information via hack or malware attack, you could be faced with a pending lawsuit. Cyber liability will help pay for any defense costs if your customer’s information is stolen.