Errors and omissions (E&O) insurance is designed to protect an insurance agent against:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
E&O insurance covers the agent's liability for professional errors, omissions, and negligent acts — such as failing to place promised coverage, giving incorrect advice, or missing a policy deadline. It protects the agent's practice and professional reputation, not the insured's property and not the insurer's solvency. Most insurers and agency agreements require agents to carry E&O coverage because an agent's mistake can expose both the agency and the insurer to liability. E&O policies typically respond to claims alleging negligent acts, errors, or omissions in the performance of professional services.
Why the other options are wrong
- B) Damage to the agent's personal property is covered by homeowner's and auto policies, not E&O.
- C) Insurer insolvency is addressed by guaranty associations (such as CLHIGA), not the agent's E&O policy.
- D) Claims against the insured's life policy are handled under that policy; E&O covers the agent's own liability.
Memory hook
E&O = insurance for the agent's own slip-ups. Mistakes in the business = covered by it.