How to Change E&O Insurance
As an insurance producer, you are required to maintain at least a minimum level of Errors and Omissions (E&O) insurance coverage. This type of insurance policy is intended to protect you and your clients in the event that you are held responsible for an error or mistake. According to an article by Glenda Wertz in the Insurance Journal, "E&O is the insurance that covers your company, or you individually, in the event that a client holds you responsible for a service you provided, or failed to provide, that did not have the expected or promised results." (See References)
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Instructions
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Research as many different E&O insurance providers as possible. By using the Internet, you will be able to quickly and easily investigate the carriers, their financial stability, and the history of claims and customer complaints. Ideally, you should purchase your E&O policy from a financially stable carrier with very few customer complaints and a strong history of paying claims from previous E&O policy owners.
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Compare the E&O policy specifications from those carriers deemed acceptable by your previous research and investigation. Examine the limitations of the products and compare the costs of the policies. E&O policy premiums can vary widely depending on the carrier and the level of coverage you need. The national average cost of an E&O policy with a $1,000,000 per claim liability limit and a $2,000,000 annual aggregate is between $700 and $900 per year.
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Decide which E&O policy is most appropriate for your particular situation and available budget. Consider the number of clients you currently service and the average size of your customer accounts when choosing your liability limits. The $1M/$2M liability limits are acceptable for most insurance producers, but should be increased if you manage any individual accounts of more than $1,000,000 or have an overall book of business value higher than $2,000,000.
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Contact the E&O carrier and request the proper application paperwork. Many carriers make these documents available on their websites to reduce the processing time for your application. There are no restrictions placed on the actual geographic location of the E&O carrier, which allows you to purchase a policy from nearly any carrier in the nation, provided, of course, that the company is licensed to conduct business in your resident state.
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Complete the policy application and return it to the carrier along with a photocopy of your insurance producer license and a check or money order for your initial premium payment.
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Tips & Warnings
If you are an independent insurance producer, search for new E&O insurance policies online. Many carriers advertise on their websites and offer policies to independent agents across the country for a fraction of the cost billed to captive agents.
If you are a captive insurance producer, your parent carrier will require you to obtain E&O insurance through their existing resources and networks of coverage providers. Most policies provided to captive agents are significantly more expensive than those offered to individual insurance producers, simply because of the agent's inability to seek policies outside the parent carrier's sphere of influence.
