Errors and Omissions Insurance

General Requirements

All insurance licensees must be covered by Errors and Omissions insurance:

  • Council Rule 7(11) establishes the requirement for all insurance licensees to maintain or be covered by Errors and Omissions insurance that includes minimum coverage of $1,000,000.00 per claim and $2,000,000.00 in the aggregate (“minimum E&O insurance”) that extends to all insurance activities.

See Council Notices:
ICN-07-007 Errors and Omissions Advisory
ICN-15-006 Errors and Omissions (E&O) Insurance
 

Where agencies or firms, operating as separate legal entities, elect to comply with Council Rule 7(11) by combining their Errors and Omissions insurance coverage under one blanket policy:

  • *The minimum coverage for the blanket policy must be equal to or greater than the minimum coverage requirement ($1,000,000.00 per claim; $2,000,000.00 aggregate) multiplied by the number of agencies or firms named on the blanket policy.
  • In addition, each agency or firm named on the blanket policy must have a dedicated coverage limit that meets the minimum coverage requirements.

*Example: If 10 agencies or firms rely on one blanket policy for their Errors and Omissions insurance, the minimum coverage for the policy must be $10,000,000.00 per claim and $20,000,000.00 aggregate, with a policy provision that each agency or firm has a dedicated coverage limit that meets the minimum E&O insurance required in Rule 7(11).

If a licensee engages in non-insurance business activities that are currently insured under the licensee’s Errors and Omissions policy:

  • The licensee must ensure that their existing Errors and Omissions policy meets the requirements under Council Rule 7(11) by providing coverage of $1,000,000.00 per claim and $2,000,000.00 aggregate, specific to insurance activities.
  • Depending on the situation, the licensee may need to purchase a specific Errors and Omissions policy for their non-insurance activities, or amend their existing Errors and Omissions policy to ensure there is minimum E&O insurance in place dedicated to cover their insurance activities, and separate coverage for their non-insurance activities.

All licensees must maintain or be covered by Errors and Omissions insurance as specified in Council Rule 7(11), regardless of his or her specific job duties.

Council recognizes that Errors and Omissions policies provided to individual life insurance agents generally provide some extension of coverage for the agency which the agent is authorized to represent. However, these coverage extensions may not apply in certain situations. An uninsured loss could occur where an agency could be held accountable, if:

  • A loss arises from the conduct of an agency representative who leaves the agency, regardless of whether the agent remains in the business, leaving the agency uninsured.
  • A loss arises from the conduct of unlicensed agency administrative support staff, who do not qualify as “insureds” under the Errors and Omissions policies held by agency representatives.
  • A loss arises from the conduct of an agency representative, and the representative failed to maintain Errors and Omissions coverage.
  • A loss arises and only the agency is named in an Errors and Omissions proceeding.