Partnering with Established Indy Agency. Do I Need My Own E&O?

insrox

Expert
25
Hello,

I am partnering with an established Indy agency in my area. He is offering me 50/50 split with no overhead but I am responsible for my own marketing costs. However, he has yet to produce a contract outlining this. He also says I will own my own BOB, but I can only sell it off to someone willing to keep it with the cluster/principal?? He also does not want to add me to the insurance carrier sites as an additional producer so everything will go under him and he said that the E&O he has will cover all business written. Shouldn't I get a copy of this policy and I would think that I need to be named on the policy since I will receive a 1099 from the managing cluster/principal. I could see if I was an employee of his agency, but since I am considered more of a partner with him I think I need to be named on the policy...any help or advice would be great!

Thanks so much :err:
 
Re: Partnering with Established Indy Agency. Do I Need My Own E&O

Hello Forum,
I am also partnering with an established Indy Agency, our deal is somewhat the same and a lil different, our agreement is i work for 50/50 commish with no overhead, my book is mine after 3 years, and i have already negotiated to buy his book when he retires in 5 years or earlier if i can generate the money, this is my problem, my partner is very sharp with insurance for sure, been in the biz since 74, although 25 of those years was as a travelers underwriter, he handled accounts from 2mill-5mill, so he retired with a nice plan, since he started his personal agency in 97, he only works word of mouth, is hardly at the office, but is only a phone call away, my point being he not only doesn't have to work it hard he never has, so i am ready to work it hard core, he has put forth lil effort and does some business, i want to kick the doors wide open and go for it, most of what i read on here has to do with life & health when reading getting started threads, i am more of a P&C, wanting to do small business,but i have my licenses in everything, I've noticed in one month that friends and family are a waste of time until i have a solid business and they need something, except my mom and dad of course they already think i know it all, I DONT KNOW ANYTHING!!!! I have owned other business, but every business is different, would love any input as to direction, can't wait to learn i am so stoked about being in this business!!!!
 
Re: Partnering with Established Indy Agency. Do I Need My Own E&O

If it's not in the contract, consider it not there whatever the guy says. You might have a great relationship and a trust there for now, but what if things change down the road? My advice is start somewhere you feel comfortable, and learn as much as you can. Because if you can get a good training and experience, that will pay you well no matter where you are. If you are able, or as soon as you can, get a good attorney who specializes in life insurance contract, and they him/her review your contract after it's done for you.

If you are planning to stay with him for a while at least, make sure everything you heard, and what you think you heard, are in the contract.

Wish you the best!
 
Re: Partnering with Established Indy Agency. Do I Need My Own E&O

I too, have a similar quandary, I just got my P&C license, and will very soon be taking my exam for L&H, and a friend of mine has offered to let me work under him and his E&O, but his business is five hours away from me, but I am not sure if I want go this way or do this on my own. I run a very sucessful business now, just not mine, and I will be doing this part-time for a while, any suggestions?
 
Re: Partnering with Established Indy Agency. Do I Need My Own E&O

E&O covers the agency, not the producer, so you are covered and don't need to be a named insured. You are not a partner, you are a 1099 producer with vested in YOUR book. Because you are splitting the commissions on the business that you are bringing in does NOT make you a partner in the entire business, and are not privy to his business documents. As far as being able to sell only to someone in the cluster, its because the cluster owns a percentage as well, so you would have to buy them out if you were to leave the cluster (Do you know what cluster?). Ask him to see something in writing so it is all spelled out for you.
-If he is a member of a cluster, he is paying them a percentage, so when he says 50/50... does he mean after he pays them their share. Let say that is 10% to the cluster, the split would really be 10/45/45. Or does he intent to pay their hypothetical 10% out of his 50%
-same commission on renewal?
Seems to me like a good deal, as you have no risk and no overhead.
 
Re: Partnering with Established Indy Agency. Do I Need My Own E&O

E&O covers the agency, not the producer, so you are covered and don't need to be a named insured. You are not a partner, you are a 1099 producer with vested in YOUR book. Because you are splitting the commissions on the business that you are bringing in does NOT make you a partner in the entire business, and are not privy to his business documents. As far as being able to sell only to someone in the cluster, its because the cluster owns a percentage as well, so you would have to buy them out if you were to leave the cluster (Do you know what cluster?). Ask him to see something in writing so it is all spelled out for you.
-If he is a member of a cluster, he is paying them a percentage, so when he says 50/50... does he mean after he pays them their share. Let say that is 10% to the cluster, the split would really be 10/45/45. Or does he intent to pay their hypothetical 10% out of his 50%
-same commission on renewal?
Seems to me like a good deal, as you have no risk and no overhead.

So are you saying that if I go to work producing for an IMO that they will own a percentage of my BOB and I will be restricted to selling that BOB because of that?
 
Re: Partnering with Established Indy Agency. Do I Need My Own E&O

Never leave home without it.
 
Re: Partnering with Established Indy Agency. Do I Need My Own E&O

E&O covers the agency, not the producer, so you are covered and don't need to be a named insured. You are not a partner, you are a 1099 producer with vested in YOUR book. Because you are splitting the commissions on the business that you are bringing in does NOT make you a partner in the entire business, and are not privy to his business documents...

Seems to me like a good deal, as you have no risk and no overhead.

I'm in a similar situation.

Just to confirm, as a sub-producing independent contractor selling P&C insurance, I should be covered under the agency's E&O policy and I shouldn't need to get my own...right? The agent (agency owner) I'm trying to work with is telling me I need to get my own E&O, but it sounds like I shouldn't need to.
 
You need to review the wording of his e and o. For example, we sell a policy where independent contractors that work exclusively for the agency can be covered. I would consider buying my own if I were in your situation, but I can't comment without knowing all of the details. If you want a quote, let me know.
 
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