Errors and Omissions (E&O) insurance protects insurance agents from lawsuits alleging negligence, mistakes, or failure to provide adequate coverage advice. If a client claims you failed to recommend a coverage they needed and they suffer a loss, E&O pays for your legal defense and any damages awarded — even if the claim is baseless.
Common E&O claims against insurance agents include: recommending insufficient coverage limits, failing to add an endorsement the client requested, not explaining a policy exclusion, missing a renewal deadline that causes a lapse, and binding coverage with a carrier that later becomes insolvent.
Yes. Period. Almost every carrier requires E&O coverage before they will appoint you. Most require a minimum of $1,000,000 per claim / $1,000,000 aggregate. Beyond the appointment requirement, operating without E&O is reckless — a single lawsuit could bankrupt your agency. The cost of E&O is a fraction of what one claim could cost you.
New agent (small book): $800 - $1,500/year
Established agency ($1-3M premium): $1,500 - $3,500/year
Large agency ($5M+ premium): $3,500 - $8,000+/year
Pricing depends on your state, lines of business, book size, claims history, and coverage limits. Agents who write higher-risk lines (commercial, professional liability) pay more than personal-lines-only agents.
Several providers specialize in agent E&O coverage: Westport (Swiss Re), IIABA (Big I), Utica National, and CalSurance are among the most common. Some aggregators include E&O coverage in their membership — this can save you $800-2,000/year. Ask before buying your own.
When comparing policies, look beyond price. Pay attention to the retroactive date (does it cover past acts?), consent-to-settle clause (can the insurer settle without your approval?), and whether the policy covers regulatory proceedings and license defense.
Document everything. Every client conversation, coverage recommendation, and declination should be in writing — email or your AMS notes. If a client declines coverage you recommended, get it in writing.
Use coverage checklists. Systematically review every exposure for every client. Checklists prevent the most common E&O claim: failure to offer coverage the client needed.
Never promise coverage you are not sure about. If a client asks whether something is covered, check the policy before answering. A wrong verbal assurance can become an E&O claim.
Review policies at renewal. Annual reviews catch coverage gaps before they become claims. Document that the review happened.
E&O is step 3 of our complete agency launch guide.
Read: How to Start an Agency →