Agents Should Know Common Exclusions in Their E&O Policies (2024)

FAQs

What are common exclusions in an insurance agent E&O policy? ›

Exclude dishonest acts with no exception for "innocent insureds" Look for: "This policy does not apply to any claim or claim expenses based upon or arising out of any intentional, willful, criminal, fraudulent, malicious, or dishonest act or omission by any insured."

FAILURE TO OBTAIN/MAINTAIN PROPER COVERAGE

For P&C agents, this is the most common source of E&O claims.

For example, most insurance policies won't cover damage caused by wear-and-tear to a vehicle or a home. Not only are these risks that can be controlled by taking proper precautions and through continued maintenance, but they're also an unavoidable aspect of owning the asset in question.

Ownership exclusion means that the policy doesn't cover claims related to property that the insured or a related party owns or has a financial interest in.

E&O insurance doesn't cover claims for property damage, bodily injury, workplace injuries, data breaches, intellectual property violations, or criminal acts such as fraud.

The three major types of Exclusions are: Excluded perils or causes of loss. Excluded losses. Excluded property.

Real estate agent forgetting to include important details about a home. The buyer files a claim against your real estate firm for negligence. Marketing consultant providing advice that caused your client to lose money on their product or service. They file a claim against your marketing company as a result.

To prevent this scenario, minimize the number of agents working with the same client. Fewer people means fewer breaks in communication where errors could occur. In addition, have the client and the agent double-check their information to ensure everything is as it should be.

What is E&O insurance? E&O insurance is a kind of specialized liability protection against losses not covered by traditional liability insurance. It protects you and your business from claims if a client sues for negligent acts, errors or omissions committed during business activities that result in a financial loss.

The Office of the Inspector General's (OIG) List of Excluded Individuals/Entities (LEIE) provides information to the health care industry, patients and the public regarding individuals and entities currently excluded from participation in Medicare, Medicaid and all other Federal health care programs.

What are two of the most common exclusions used by underwriters? ›

Risky activity: Any death due to risky activities, such as skydiving or rock climbing, are usually counted as an exclusion. Substance abuse: If a policyholder's death is the result of drug or alcohol abuse, it may be excluded from their policy.

An exclusion is a provision within an insurance policy that eliminates coverage for certain acts, property, types of damage or locations. Things that are excluded are not covered by the plan, and excluded costs don't count towards the plan's total out-of-pocket maximum.

Errors and omissions insurance (E&O), also known as professional liability insurance, often includes two types of policy limits. The aggregate limit is the total amount your provider will cover for the policy term (usually one year). The per occurrence limit is the amount your provider will cover in a single claim.

An errors and omissions clause is a provision, usually in an obligatory reinsurance treaty, stating that an error or omission in reporting a risk that falls within the automatic reinsurance coverage under such treaty shall not invalidate the liability of the reinsurer on such omitted risk.

Most general liability insurance policies for businesses are occurrence based policies, while errors and omissions (E&O) coverage is typically claims made.

An umbrella policy generally does not provide coverage for: your injuries or damage to your personal property. a criminal or intentional action causing damage to someone else. liability you assume under a contract.

E&O insurance often does not cover bodily injury inflicted by your business as that is typically covered by general liability insurance. It's crucial that your E&O policy has a limit of liability large enough to cover the total cost of a property that your client has purchased.

The most common key person insurance exclusions are fraud, misrepresentation, and suicide. A claim can be denied in case of a proven instance of intentional dishonesty. During the first two years of every life insurance policy, there is a contractual clause known as the contestability period.

Most errors and omissions insurance policies cover judgments, attorney fees, court costs and settlements up to the limits of the policy. Some events resulting in a loss for a client may have occurred several years in the past, and the first time the mistake is apparent is when a court summons arrives in the mail.