Understanding Professional Liability Insurance for Insurance Agents

As an insurance professional, you understand the critical importance of comprehensive coverage. After all, it’s your job to showcase the importance of coverage for the insurance you offer to your clients and customers.

Why wouldn’t you apply this same principle to your own business?

Professional liability insurance is a critical element to every agent's ongoing practice. Without a solid liability plan in place, you risk significant damages in the event of a negligence claim or civil lawsuit award from a client. Accordingly, it is critically important to understand all the aspects of professional liability insurance for insurance agents – and get yourself sufficiently covered.

The Nuts-and-Bolts of Professional Liability

At its heart, professional liability insurance is a service for the protection of agents and brokers. This protection helps keep you from being responsible for all costs and damages from defending yourself from a negligence claim or bearing all the costs of a civil lawsuit award.
This type of coverage primarily protects you when it comes to allegations or lawsuits about your failure to perform a duty or service for policyholders working through you. These include any of the following areas:

• Not Performing (or Improperly Performing) a Service for a Client
• Financial Losses Caused by a Product/Service Sold to a Client
• Errors or Omissions in a Policy, Product, or Service Sold to a Client

These elements are potential areas for legal recourse from a client. If you’re not protected, you could face dire financial consequences and even the loss of your business.

Is General Liability Okay?

For the most part, professional liability insurance is required by law to operate as an agent or broker. However, this may not always be the case – and you may not realize the importance of having it.
If you think you only need general liability insurance, then you need to understand the distinction. General liability insurance policies typically will not cover the specific elements faced by brokers or agents. Getting a specific professional liability plan will ensure coverage for these more direct elements of harm.

What’s Covered in Professional Liability Insurance?

• Wrongful Acts: A broad-scope definition of this term includes any type of act, error, or omission as well as personal injury.

• Claim: Claims also include everything up to disciplinary actions and proceedings (with specific limits based on your coverage).

• Professional Services: This specifically covers your insurance service given for a fee – including agents, brokers, consultants, managers, financiers, administrators, adjusters, handlers, and notary publics.

• Loss: A loss specifically covers you for punitive damages which are insurable by the law, including interest for pre and post-judgments.

Group-Sponsored Errors & Omissions Insurance Programs

Another important component of your liability insurance should also include coverage for errors and omissions (E&O). Group-sponsored E&O coverage keeps you protected in all of the following areas:

• Negligence in your actions, errors, or omissions in any of your professional services as an agent or broker. This also includes negligence for registered principals or registered representatives such as notary publics.

• Any type of personal injuries which are specifically defined in your particular E&O policy. These will likely vary depending on your specific coverage, so ensure that you review what it covers and what it doesn't.

• If you're a district manager, this also includes any additional negligence, omissions, and related errors you may cause while training, supervising, and even recruiting other individuals.

Group policies often come when you’re an agent or a broker through a specific insurance firm. As mentioned, specifics will vary depending on which insurance firm you work with or which coverage you choose.

Keeping Yourself Covered At All Times

While agents likely already have professional liability insurance, make it a point to learn all the components of this essential element to your job. And make sure that your policy includes all the coverage you’ll need to remain fully protected throughout your business operations.

If you are interested in a group sponsored E&O program for your insurance entity, please contact CalSurance Associates at: (800) 745-7189.

All information provided in this blog is for informational purposes only. The sources used are presumed accurate. CalSurance Associates, Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use and will not assume responsibility for any misguided information. No guarantees are implied.