Who do you have E & O WIth?

[shooter]

Price isn't the issue.
I want coverage I can count on if, I need it.

Would you add DI or annuities?
Not big in those markets, but you never know when an opportunity
may present it self.

Thanks,
Shooter

 

[shonceman]

Wow. No replies. I have it with NAPA. Mine includes annuities and “incidental” P&C.
NAPA Errors and Omissions (E&O) Insurance for Agents and Agencies

 

[Travis Price]

Wow. No replies. I have it with NAPA. Mine includes annuities and “incidental” P&C.
NAPA Errors and Omissions (E&O) Insurance for Agents and Agencies

Is it weird that I don't know? I think mine is with Calsurance. I have the declarations page on my computer.

I can't speak for anyone else, but I don't really think about E&O as most other insurance. The case use is really specialized and rare, which is why it's so cheap (comparatively.)

I just consider it a cost of business... Maybe someone that's had a claim that's paid out could express how important it is (other than the above cost of business) instead of a hypothetical situation.

 

[scagnt83]

Currently Im with BCS Insurance, administered by Gallagher/Affinty, sponsored by BCBSofSC. Clear as mud? lol

BCS Insurance has a strong plan. It covers literally everything we could sell as agents. Health, all types of life, di, annuities, variable products, mutual funds, sec 125 plans, group benefits, self funded plans, managed health care orgs.

Im not sure what the discount is that BCBSofSC affiliation gives me. But its not much more than being with NAPA/Calsurance/E&OforLess/etc. And I've used all of those in the past.

If I remember right, Calsurance had the strongest most comprehensive policy language out of those three. I would rank it just below BCS in coverage.

 

[shonceman]

Is it weird that I don't know? I think mine is with Calsurance. I have the declarations page on my computer.

I can't speak for anyone else, but I don't really think about E&O as most other insurance. The case use is really specialized and rare, which is why it's so cheap (comparatively.)

I just consider it a cost of business... Maybe someone that's had a claim that's paid out could express how important it is (other than the above cost of business) instead of a hypothetical situation.

I’ve known agents that don’t have E&O at all because they feel they’re at a pretty low risk of needing it. I don’t believe my risk is very high, either, even though I occasionally write a larger case, and 1 or 2 homeowner policies per year. The overwhelming majority of what I write is low face FE type life insurance. The likelihood of those policies generating an E&O claim is pretty low, and many FE companies don’t even require it. In 31 years, I’ve never had a claim, and don’t expect to in the future. But I think it would be foolish to go without it. Like all other insurance, better to have it and never need it than to need it and never have it.

 

[Travis Price]

I don’t think it’s probably necessary to cover myself for the majority of the Final Expense policies I write, and many of those companies don’t require it. But I write larger cases from time to time, as well as an occasional annuity. I also write an occasional homeowners or renters policy. In 31 years, I’ve never had a claim, and don’t expect to in the future. But I think it would be foolish to go without it.

I agree.

Which is why I chalk it up to a necessary business expense, but I wouldn't overthink carriers.. just because it's rare to have a claim if you're doing a decent job AND it's even rarer to have a claim that's covered.

 

[scagnt83]

I can't speak for anyone else, but I don't really think about E&O as most other insurance. The case use is really specialized and rare, which is why it's so cheap (comparatively.)

I just consider it a cost of business... Maybe someone that's had a claim that's paid out could express how important it is (other than the above cost of business) instead of a hypothetical situation.

I would rethink that, at least to some extent. Its kind of like saying "chances of dying are so small it doesnt matter if my life insurance covers the claim or not".

E&O claims happen more than you may think. Most do not actually make it to court, so true industry stats are only known by the E&O carriers.

The line of business you sell does dictate your risk. The risk of a $20k FE policy is a lot different than a $5m IUL.

Im not sure about the most a client could end up paying if you omitted an OOP Expense on a Med Sup Plan. $5k? $10k? $25k? $100k? I truly do not know. But I do think they could switch to a plan with an annual OOP maximum after 12 months.

But think about the risk of a DI policy on a high income earner who gets a $20k/month benefit until age 65, for a total benefit of $6m (not counting cola) over a 25 year claim. Say the agent had a bad day and omitted asking a key question. Claim is reviewed and denied. Now that high earner, who has plenty of money for an attorney, has a valid complaint against you.


Or think about a $20k premium IUL over 10 or 15 years. If I "error" and design the policy wrong and dont max it out, yet tell the client its maxed out, I would be on the hook for the difference in accumulation that the client should have received.


If I sell a $500k annuity, tell the client its a 10 year surrender period, but its really a 15 year surrender period.... and there is a 10% surrender charge to the client... Im on the hook for $50k.


If I "fail to replicate coverage" (one of the most common E&O claims for agents) on a Self Funded Group Plan. Causing unexpected contributions by the business to fund the plan, I could be on the hook for $50k-$200k depending on the situation.


What if a life agent "errored" and never updated the beneficiary as requested on a life policy? They could be sued for legal costs of recovery if the new bene was successful in recovering funds. If they werent successful, many states would allow them to sue the agent. And $1m life policies are very common.


The risk increases exponentially when the client has the means to sue, and very large sums of money are at hand.

I once saw a case where the client requested the DB be raised by $1m on their IUL policy. Agent "omitted" that this would virtually eliminate cash value growth. Maybe they knew it would, maybe they just didnt know the product and were selling IUL for the first time with zero guidance. But $120k in premiums later, the client realized this and came to me for advice. I didnt get involved other than help write correct policies for them (he went with WL), but the issue did go to court. Not only was it the $120k in premiums (on 2 policies, so $240k), but it was the lost interest, and the higher COI they were forced to pay 4 years down the road.


But something as simple as a form getting the wrong box checked, or failing to get submitted, could trigger a potential E&O claim. Sure, you and every other agent has their sh*t together and never make mistakes like that. But there is an old saying in our industry. Insurance is for the "what ifs".

Id bet statistically there is a higher likelihood of you getting an E&O claim than having an early death. So do you have the same view towards life insurance?

 

[scagnt83]

AND it's even rarer to have a claim that's covered.

This part I disagree with. E&O does not kick in if an agent broke the law. Otherwise, that statement is highly inaccurate based on my 15 years in this industry.

I have known agents who used their E&O and were very grateful to have it.

Remember, not all E&O claims are valid. You dont have to actually do anything wrong to get sued by a client. But you will be paying attorney fees regardless of if you actually messed up or not... or your E&O could be paying the tens of thousands in attorney fees instead.

Sometimes you just get a pissed off person who is miserable in life and decides you wronged them and has the money to hire an attorney. E&O isnt just about them winning in court, its about you not having to pay tens of thousands for an attorney to represent you against some irrational person who decided to target you for their life issues.

I will say that E&O claims are much more common on the P&C side vs. L&H. But they happen every day on the L&H side, especially with health products since claims can be reviewed no matter the policy year.

Havent used mine, dont plan to, but it will always be there.

 

[Travis Price]

I would rethink that, at least to some extent. Its kind of like saying "chances of dying are so small it doesnt matter if my life insurance covers the claim or not".

E&O claims happen more than you may think. Most do not actually make it to court, so true industry stats are only known by the E&O carriers.

The line of business you sell does dictate your risk. The risk of a $20k FE policy is a lot different than a $5m IUL.

Im not sure about the most a client could end up paying if you omitted an OOP Expense on a Med Sup Plan. $5k? $10k? $25k? $100k? I truly do not know. But I do think they could switch to a plan with an annual OOP maximum after 12 months.

But think about the risk of a DI policy on a high income earner who gets a $20k/month benefit until age 65, for a total benefit of $6m (not counting cola) over a 25 year claim. Say the agent had a bad day and omitted asking a key question. Claim is reviewed and denied. Now that high earner, who has plenty of money for an attorney, has a valid complaint against you.


Or think about a $20k premium IUL over 10 or 15 years. If I "error" and design the policy wrong and dont max it out, yet tell the client its maxed out, I would be on the hook for the difference in accumulation that the client should have received.


If I sell a $500k annuity, tell the client its a 10 year surrender period, but its really a 15 year surrender period.... and there is a 10% surrender charge to the client... Im on the hook for $50k.


If I "fail to replicate coverage" (one of the most common E&O claims for agents) on a Self Funded Group Plan. Causing unexpected contributions by the business to fund the plan, I could be on the hook for $50k-$200k depending on the situation.


What if a life agent "errored" and never updated the beneficiary as requested on a life policy? They could be sued for legal costs of recovery if the new bene was successful in recovering funds. If they werent successful, many states would allow them to sue the agent. And $1m life policies are very common.


The risk increases exponentially when the client has the means to sue, and very large sums of money are at hand.

I once saw a case where the client requested the DB be raised by $1m on their IUL policy. Agent "omitted" that this would virtually eliminate cash value growth. Maybe they knew it would, maybe they just didnt know the product and were selling IUL for the first time with zero guidance. But $120k in premiums later, the client realized this and came to me for advice. I didnt get involved other than help write correct policies for them (he went with WL), but the issue did go to court. Not only was it the $120k in premiums (on 2 policies, so $240k), but it was the lost interest, and the higher COI they were forced to pay 4 years down the road.


But something as simple as a form getting the wrong box checked, or failing to get submitted, could trigger a potential E&O claim. Sure, you and every other agent has their sh*t together and never make mistakes like that. But there is an old saying in our industry. Insurance is for the "what ifs".

Id bet statistically there is a higher likelihood of you getting an E&O claim than having an early death. So do you have the same view towards life insurance?

I don't think I need to rethink it... honestly..

Because I carry it. I'm also not advocating not carrying it.

My point was really against "I'll pay whatever it takes just to know if I'm covered for everything, just in case on the off chance I write something."

Don't try to be all things to all people. Know your market and get those things.

Looks like op is is going to be in a basic line of insurance. Going all in on a top of the line policy is less important than getting what you need at the best price possible.

All things being equal, and your needs being basic, would you suggest an FE plan or MS plan that's 50$ more?

I wouldn't. E&O is a business expense. Get what you need at the best price possible. You can always add on more later.

Ymmv, and that's fine. I don't sell multimillion dollar annuities or complicated Life Insurance products.

 

[Tony Hardwick]

I have NAPA