Errors and omissions (E&O) insurance for insurance agents is designed to protect the agent against:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Errors and omissions insurance is professional liability coverage that protects agents and brokers against claims alleging negligence, mistakes, or omissions in performing professional duties, such as failing to obtain proper coverage, giving incorrect advice, or mishandling an application. It does not cover deliberate wrongdoing, dishonest acts, or the agent's own property losses. Because insureds can sue producers for negligent advice, E&O coverage is an important risk-management tool for every professional producer, and some insurers or agencies require producers to maintain it.
Why the other options are wrong
- B) Damage to the agent's own property would be covered by the agent's personal or business property insurance, not by professional liability coverage.
- C) Unpaid premiums are a collection matter between the agent and the policyholder; E&O does not pay those losses.
- D) E&O does not cover the insurer's ordinary claim experience; it covers the agent's professional mistakes.
Memory hook
E&O = the malpractice policy for advice-givers. It covers your professional mistakes, not your stuff.