Our top 5 Most Common Insurance Agents Claims Mistakes

As Insurance Agents, it is absolutely vital we not only do we not purchase, but we maintain Errors & Omissions Insurance Coverage throughout our careers without lapse in coverage. I’ve heard all the excuses why I don’t need coverage, “I always check my clients applications twice” or “you can always count on the underwriters to give them a second look”, I’ve heard them all and their all foolish.  I don’t care if you are a Life & Health or Property & Casualty Agent, both have long days, even longer nights, all get tired and make mistakes. Even if they don’t, there’s an inexperienced CSR working for you whom will always let you down. Unfortunately, most of these Errors and Omissions don’t show up until it’s time for a claim.  In Life Insurance, those claims typically don’t appear for 5, 10, 15, 20 and  even 25 years. You may be retired or left the business years ago, not only should you ensure you have coverage, you better make sure it will cover that claim going back sometimes 25 or more years.  

There are a number of reasons for an E&O Insurance Claim. Let’s review our top 5 most common errors or omissions claims made by insurance agents and often require insurance coverage. These mistakes can lead to financial losses and legal liabilities. However, please note that specific coverage requirements may also vary based on the insurance company and policy you have or may be coming up for Renewal. Here are our top five top examples:

  1. Failure to Procure Appropriate Coverage:  this is HUGE! If an insurance agent fails to properly assess a client’s needs and provide inappropriate coverage, it can result in gaps in coverage or inadequate protection against potential risks. This error can leave the client exposed to financial losses and obviously requires  agents to maintain Errors and Omissions (E&O) insurance coverage.
  2. Negligent Misrepresentation: Insurance agents have a duty to provide accurate information to their clients. This is a huge problem for young inexperienced agents. If an agent provides false or misleading information about policy terms, coverage limits, or exclusions, and the client suffers financial harm as a result, the agent may face a claim for negligent misrepresentation. Not only may this result in a claim, it may result in non-renewal of your Errors & Omissions Coverge. If the misrepresentation is bad enough, you may be unable to obtain new coverage and Permanent Revocation of your Insurance License. 
  3. Failure to Timely Notify Claims: When an insured person or entity notifies you of a claim, insurance agents have a responsibility to promptly notify the insurance company. If an agent fails to do so within the required timeframe, it may jeopardize the insured’s ability to receive payment for the claim and may result in a professional liability claim against you.
  4. Breach of Fiduciary Duty: Life Insurance Agents, listen-up. Insurance agents owe a fiduciary duty to act in the best interests of their clients. If an agent breaches this duty by placing their interests above those of the client, such as recommending policies that provide higher commissions for the agent but are not in the client’s best interest, it can lead to financial harm and potential legal claims.
  5. Documentation Errors: Here it is kids, accurate documentation is essential in the insurance industry. Errors on policy applications, certificates of insurance, coverage endorsements, or other important documentation can result in coverage disputes, delays in claims processing, or even denial of coverage. Agents may require insurance coverage to protect against the potential consequences of such errors.

It’s important to note that insurance agents typically carry Errors and Omissions (E&O) insurance to protect themselves and their agency’s from claims arising out of their licensed professional services. The specific coverage and terms can vary, so it’s advisable for insurance agents to consult with their insurance agent to understand the extent of their coverage.  Keep in mind, if anyone know about proper application of Errors & Omissions Insurance Coverge, consult one who actually purchases similar coverage for themselves and their own agents and agency.  

You may also suffer other complications and consequences as a result of poor coverage planing. I will review some of these in future articles. I will explain why it’s absolutely crucial your Professional Liability Insurance Policy be adequate for the Book of Business you maintain. not only has better Insurance Agents Errors & Omissions Coverage Limits of $1,000,000 per claim, $3,000,000  per policy – per year, our Licensed Professional Liability Insurance Sales Agents maintain well over 100 years in Property & Casualty Insurance Sales experience.  Oh yea, I forgot, our rates are better. We are available 24 Hours a day to purchase coverage at and to receive your questions or concerns, an Agent will respond with their Phone # to resolve your issue if it can’t be resolved online.