Why is the Need for E&O Insurance?

[FL_PC]

I know that is stands for error and omission insurance but what's the need for it?
You prepare a proposal with some cases/limits and the customer signs and accepts it. Where is the error/omission in this transaction?
Your patient and valuable responses are greatly appreciated as always and thanks in advance.

 

[nyc2phi]

As a licensed & educated insurance agent, it is your job to provide the consumer with the product that best suits their need. Even if the client signs off you may still be liable if anything was to go wrong and they didn't have the proper coverage. They may say you convinced them that this particular coverage was correct and that you trusted their judgement. The courts in my opinion will see this as your fault.

E&O is there for your protection just like malpractice is for a doctor.

 

[rousemark]

If you don't mind putting everything you own or will own at risk, you have no need for E&O. What makes you think you actually have to do something wrong for a judge or jury to to find you at fault?

 

[FL_PC]

If you don't mind putting everything you own or will own at risk, you have no need for E&O. What makes you think you actually have to do something wrong for a judge or jury to to find you at fault?

I am just trying to understand the need for it. And, I am using my common sense (and newbie ignorance in this industry)

And certainly, the assumption is that the agent explains and verifies everything before the customer signs.

To me. it sounds slightly different from a doctor's malpractice because after an operation something unknown/unexpectable might come out. There is an "in case" scenario. But in insurance, everything is clear right? (I don't know what happens when the insurance does not pay for the claims by the way)
If the court tends to find the agent guilty regardless of the signed proposal, then of course an E&O is a must.

 

[Guest]

YOU screw up, The E&O pays.......

You Tell someone something is covered, and it isnt, YOU just paid.

You write a millionair with minimum limits, and you will pay.

You dont write someone witl UIM, you will probally pay.

YOU under-insure a house, you might pay.

 

[FL_PC]

YOU screw up, The E&O pays.......

You Tell someone something is covered, and it isnt, YOU just paid.

You write a millionair with minimum limits, and you will pay.

You dont write someone witl UIM, you will probally pay.

YOU under-insure a house, you might pay.

Hey thanks RBA! Nice to see your response. I am sure you are looking for one from AgencyEquity!

I did not get this by the way; "You dont write someone witl UIM, you will probally pay." I am a newbie and still have problem with abbreviations.

 

[Golfnut2112]

I will give you a simple case that went bad when I started. I wrote a policy on a guy with a children term rider. About a year after issue when the kid was 17 he was playing chicken with cars by standing in the middle of the road, got hit and killed. The company contested the claim and did not pay because one of the questions was have you every been arrested and he was. About 4 months later the dad called and said it was illegal in my state for a company to ask a minor that question. I called the company and they finally paid the money 6 months after his death. When they agreed to pay, some smart a$$ attorney wrote a letter with the check telling him he to get on with his life. He sued and won over $600,000 for the company using unfair claim practices. It cost my E&O $25,000 plus legal fees. I dropped the company and the guy has been a great client the last 22 years.

 

[rousemark]

I am just trying to understand the need for it. And, I am using my common sense (and newbie ignorance in this industry)

And certainly, the assumption is that the agent explains and verifies everything before the customer signs.

To me. it sounds slightly different from a doctor's malpractice because after an operation something unknown/unexpectable might come out. There is an "in case" scenario. But in insurance, everything is clear right? (I don't know what happens when the insurance does not pay for the claims by the way)
If the court tends to find the agent guilty regardless of the signed proposal, then of course an E&O is a must.

I wasn't trying to be a smart alec ( well, maybe a little).. The reason you need E&O is that unless you are perfect, you might make a mistake one day. People sue when mistakes are made. But even if you are perfect, people sure over "perceived" mistakes and some times juries feel sorry for that poor little policy holder and grant a judgment against that big ol' insurance company and its representative.

True story. I was a GA for a company that sold Major Medical insurance in the 1980s. The policy and all the literature stated that maternity was not covered.. no way, no fashion. A girl in Alabama had a baby. The company did not pay. The girl sued. She was granted a judgment against the company for $3,000,000.00. The judgement was upheld on appeal. As a result, the company withdrew from the MM business sand cancelled the entire block in all states.(killed my renewal base).. In those days it wasn't like it is now. The attorneys went after the companies deep pockets.. Now, they sure everybody involved... including the lowly agent.

I was dead serious when I said , "If you don't mind putting everything you own or will own at risk" because if you go without E&O that is what you are doing.. You are in the business of protecting people against possible loss.. Isn't it worth $10.00 per week to protect yourself against the loss of not only everything you have now but possibly everything you hope to have in the future?

Wish you great success in the business.

 

[Expat]

I know that is stands for error and omission insurance but what's the need for it?
You prepare a proposal with some cases/limits and the customer signs and accepts it. Where is the error/omission in this transaction?
Your patient and valuable responses are greatly appreciated as always and thanks in advance.

Even if you had the Pope notarize your proposal, some ahole will still attempt to sue you. Lots of clients develop selective deafness and blindness when it suits them. Nature of the business.

 

[rousemark]

Even if you had the Pope notarize your proposal, some ahole will still attempt to sue you.

And the Pope!