Many independent insurance agents start offices on a shoestring budget. They look to cut costs in every area, including insurance. They may wonder about the necessity of coverage to protect against insurance agent professional liability. Instead of purchasing insurance, they may decide to save the money by carefully checking their work product and ensuring it meets the highest standards possible. However, this strategy may leave agents vulnerable to significant risk.
Lawsuits Are Not Directly Related to Quality
Many agents issue standard policies on boilerplates provided by their providers. In many ways, they reason, there is not much occasion for error. However, any judgments on the part of the agent are candidates for a challenge by the client. These include:
- The level of the insurance
- The amount of the deductible
- Any decision point in the policy
Often, top-notch agents are sued by clients even though the work product is essentially perfect. At that point, the agent must deal with the court costs of the suit, even if it ends in his or her favor. The time the agent spends in court can also account for a significant loss of earnings. This means that every insurance agent has exposure to E&O lawsuits.
Often, an E&O claim occurs when a client files an insurance claim and comes up short. Many clients in this situation attempt to cut their losses by making a malpractice claim against the agent. For this reason, E&O coverage is essential to protect against insurance agent professional liability.