There’s a certain irony in insurance agencies that are diligent about recommending professional liability coverage to every client they place business for, yet carry thin or outdated errors and omissions coverage on their own agency. Agents and brokers face a very specific set of E&O exposures tied to the advice they give and the coverage they do — or don’t — recommend, and those exposures have only grown as coverage programs have become more complex.
What Triggers an E&O Claim Against an Agency
Most claims against agents and brokers trace back to a handful of recurring scenarios: failing to procure coverage the client actually requested, placing a policy with a gap or exclusion the client wasn’t told about, giving advice about coverage adequacy that turns out to be wrong, or failing to timely process a policy change, cancellation, or renewal. The common thread across all of these is that the claim usually isn’t about whether a carrier paid a claim correctly — it’s about whether the agency gave the client what they were supposed to have in the first place.
Failure to Procure: The Single Most Common Claim Type
A client asks for a specific coverage or limit, the agency doesn’t actually bind it — whether through miscommunication, an administrative error, or a misunderstanding about what the client wanted — and the client later has an uncovered loss they believed was insured. This type of claim, often called failure to procure, is typically one of the leading causes of E&O claims against agencies precisely because it doesn’t require any judgment call or advice to go wrong; it just requires a request to fall through the cracks somewhere in the process.
Documentation Is Usually the Difference Between a Defensible Claim and an Indefensible One
Because so many E&O claims against agencies turn on a dispute about who said what, documentation tends to matter more here than almost anywhere else in professional liability. A written record of coverage recommendations made, declined, or modified at the client’s request — emails, signed coverage selection forms, file notes from phone calls — is often what separates a claim the agency’s E&O carrier can defend from one that turns into a costly settlement. Agencies that rely heavily on verbal conversations and informal notes are generally taking on more risk than they realize.
How Agency E&O Differs From the E&O You Sell to Clients
It’s worth remembering that the E&O policy an agency carries on itself is underwritten very differently than the E&O policies it places for consultants, accountants, or other professionals. Agency E&O underwriters typically look closely at agency procedures — how coverage recommendations are documented, how renewals and changes are tracked, and what errors-and-omissions training staff receive — because those procedures are often what determines claim frequency more than the size of the book of business itself.
Claims-Made Coverage and the Agency’s Own Tail Exposure
Agency E&O is almost always written on a claims-made basis, which means the same retroactive date and tail coverage considerations that agencies explain to their own clients apply directly to the agency itself. An agency that switches E&O carriers, closes a book of business, or has a principal retire needs to think through its own prior acts and tail coverage exposure with the same care it would recommend to any client facing the same transition.
An agency’s own E&O policy is worth the same periodic review the agency gives its clients’ coverage — because the exposure an agency carries for its own advice and procedures is often larger, and less visible day to day, than most principals assume.
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