Avoiding Costly Mistakes: The Top 5 E&O Claims Insurance Agents Face and How to Prevent Them

As an insurance agent, your role is to protect your clients from financial risk—but what happens when a mistake on your end leads to uncovered claims, policy disputes, or even lawsuits? Errors & Omissions (E&O) claims are a major concern in the industry, and even the most experienced agents can find themselves facing legal and financial repercussions due to misunderstandings, miscommunications, or administrative slip-ups.

From failing to secure the requested coverage to misrepresenting policy details, certain mistakes tend to be more common than others. Fortunately, with the right preventative measures, you can significantly reduce your risk and safeguard both your business and your clients. In this post, we’ll explore the top five most common E&O claims for insurance agents and practical steps to prevent and mitigate them. Let’s dive in!

1. Failure to Procure Adequate/Requested Coverage

• Issue: An agent fails to obtain the correct or sufficient coverage requested by the client, leading to an uncovered loss.
• Prevention/Mitigation:
  • Conduct a thorough discovery and document coverage discussions (phone calls recordings – where allowed by law – and/or email are your friend here).
  • Clearly communicate policy limits, exclusions, and available endorsements.
  • Provide written confirmation of coverage recommendations and client decisions.
  • Maintain copies of signed applications and declination forms if they reject recommended coverage.

2. Misrepresentation or Inaccurate Policy Information

• Issue: An agent provides incorrect policy details, leading to a misunderstanding about coverage.
• Prevention/Mitigation:
  • Always review policy documents for accuracy before issuing them to clients.
  • Never make guarantees about coverage.
  • Encourage clients to read their policies and ask questions.
  • Document all conversations and clarifications in writing.

3. Failure to Renew or Properly Service Policies

• Issue: A policy lapses due to an agent’s oversight, leaving the client uninsured.
• Prevention/Mitigation:
  • Implement a structured renewal reminder system with multiple follow-ups (CRM/AMS with a built out renewal automated process including emails and texts for consistency is key).
  • Confirm policy changes or renewals in writing.
  • Maintain detailed records of all renewal communications.
  • Educate clients on their renewal responsibilities and deadlines.

4. Failure to Disclose Exclusions or Policy Limitations

• Issue: Clients assume they have coverage for specific risks, only to discover exclusions after a claim is denied.
• Prevention/Mitigation:
  • Clearly explain all exclusions, limitations, and endorsements.
  • Use plain language and provide written explanations of coverage gaps.
  • Offer optional coverage or additional policies to fill gaps.
  • Have clients acknowledge receipt of policy documents and disclaimers.

5. Errors in Certificates of Insurance (COIs) or Endorsements

• Issue: Inaccurate or incomplete COIs misrepresent coverage, leading to disputes.
• Prevention/Mitigation:
  • Never issue COIs that alter or expand coverage beyond the policy terms.
  • Regularly verify COI details with the insurance carrier.
  • Train staff on proper COI issuance and documentation.
  • Maintain copies of all issued COIs for recordkeeping.

By implementing strict documentation, client communication protocols, and internal checks, insurance agents can significantly reduce their E&O risk exposure and maintain stronger client trust.

My Insurance Group is a modern-day insurance advisor, providing tailored options and quality service from quote to claims. If you’re ready to experience a better way to insure, call us at (210) 708-3203 or Click here to get started on your quote.