What Is E&O (Errors and Omissions Insurance)?

Why it matters

Carriers and agencies often require proof of E&O before contracting. It may cover legal defense and certain damages if a customer says the agent gave bad advice or filed an application wrong. Limits, deductibles, and exclusions differ by policy. Some agencies offer a group program. Agents should read what the policy covers, since it does not cover fraud.

Source: law.cornell.edu

Where we use this term

How to join an IMO: the questions to ask before you sign

Related terms

Contracting: Contracting is the process of signing an agent up with an insurance carrier so the agent can sell and be paid on its products. It includes forms, a background review, and a commission agreement.
Surety Bond: A surety bond is a three-party promise in which a surety company guarantees that a person will meet an obligation. If the person fails, the surety pays and then seeks repayment.
Independent Agent: An independent agent is licensed to sell products from more than one insurance company and is not tied to a single carrier. Most independent agents are contractors, not employees.
Agency: An agency is a business licensed to sell insurance through its agents. It can hold carrier contracts, employ or contract with producers, and in many states needs its own entity license.
Background Check: A background check is a review of a person's criminal and sometimes financial history. States and carriers use it to decide whether to license or contract an agent.

All 241 terms

Errors and Omissions Insurance (E&O)

Why it matters

Where we use this term

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