Life Insurance Agents – E&O

E&O Insurance for Life Insurance Agents

Get a competitive E&O Insurance quote that meets provincial requirements to operate as a life insurance agent in Canada.

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Insurance for life agents

As a life insurance agent, you play a crucial role in ensuring a life insurance package is suitable for your client’s needs and accurately informed on the coverages offered. While you’re likely extra cautious in your wording and use your expertise to answer their questions, there’s always a risk that you miss out on an important detail or accidentally provide incorrect advice. That’s why it’s crucial to protect yourself, your clients, and your business with E&O Insurance.

Life insurance agents have unique risks and need insurance that’s focused on covering specific liabilities. At Zensurance, we’ve helped more than 100,000 entrepreneurs protect their businesses with insurance policies designed to cover their particular needs. Below you’ll find helpful information to answer your top questions about E&O Insurance for life insurance agents.

E&O (errors and omissions) is a policy that protects life insurance agents from legal claims related to allegations of negligence. This includes causing financial loss due to a service you provided, as well as coverage for lawsuits alleging errors in the information provided, misconduct or failure to deliver services.

To protect your business against the risks you are most likely to face as a life insurance agent, consider the following coverages as part of your risk assessment strategy:

  • Errors and Omissions Insurance (E&O): Also known as Professional Liability Insurance, this is a mandatory coverage designed to protects life insurance agents against claims from financial loss to a client because of a service you provided. This can include lawsuits for failing to deliver a service as promised due to accusations of negligence or misconduct. Suppose you issued a life insurance policy to a 50-year-old non-smoker. When the client checks on his coverage years later, you notice you accidentally inputted that the client was a smoker, significantly increasing the rate they’d been paying. Your client could sue you for your mistake, and in this case, E&O insurance may cover the legal fees and damages, including monetary judgments.

Additional coverages:

  • Commercial General Liability Insurance (CGL): Commercial General Liability Insurance can protect life agents against common claims or lawsuits that allege third-party bodily injury (such as a slip-and-fall incidence) or property damage. Say you’re about to provide a quote to a client in your office space. Your client falls off the wobbly chair you provided due to its instability. Your client could sue you should they be injured, and your CGL insurance may cover legal defence costs and medical costs.
  • Commercial Property Insurance: Commercial Property Insurance protects your business and business property from an insured event, such as a fire, theft or vandalism. Suppose your office experienced fire damage from an overheated electrical device. This destroyed the expensive computer systems you use on a day-to-day basis. Commercial Property Insurance could cover the cost to replace the business equipment that was damaged or destroyed.
  • Cyber Insurance: Cyber Insurance is essential for life insurance agents who store client information or confidential data on a computer. This coverage could cover costs associated with cybercrime involving your technology systems and customer data, such as incident response and breach management fees. Say a virus was accidentally downloaded on a work computer, and over the course of two weeks, the spyware emailed the hacker over 1,000 screenshots of confidential data on 20 customers. Cyber Liability Insurance could provide coverage for notification and credit monitoring expenses for the affected customers.

Cost-wise, it’s not possible to give a set amount as insurance premiums vary by the size of your company and specific services offered. For an estimate, E&O Insurance for life insurance agents starts at around $540 annually, with a $1M limit.

When you quote through Zensurance, you’ll be asked questions about your business that help us to understand what you need. With this information, we can then give you an accurate quote. Here are some of the factors that are taken into consideration when determining the best policy options for you:

  • Annual and Projected Gross Revenue
  • Years of Experience
  • Asset Value Managed
  • Number of Employees
  • Location
  • Claims History

Any independent life insurance agent or life insurance business is required to be protected with E&O insurance in Canada, though mandatory coverage limits may differ from province to province. For example, in Ontario, you must have at least $1,000,000 coverage per occurrence, with extended coverage for fraudulent acts.

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Common claims scenarios

life insurance broker

Problem: While a client is asking you about their policy’s expiry date, you mistakenly tell them the policy expires on May 2nd when it was actually on February 5th. The client unexpectedly passes in April, and the beneficiary files a claim; it becomes apparent there is no active life insurance policy.

Outcome: The beneficiary successfully sues you for failure to provide the correct information. Your E&O Insurance may cover the legal fees and any other expenses, totalling $800,000.

life insurance policy document

Problem: A client lets you know that they’ve been diagnosed with a heart condition, so you updated their policy. Months later, another client with the same name calls in to complain that their insurance went up. It turns out the two policies were mixed up, and confidential information was added to the wrong profile – plus the premiums were inaccurate.

Outcome: The second client sues you for professional negligence. Your Errors and Omissions Insurance may cover the legal fees and any other expenses, totalling $100,000.

office desk

Problem: You’re the owner of a life insurance brokerage. One evening, your office is broken into, vandalized, and some expensive computer equipment is stolen from the premises.

Outcome: Your Commercial Property Insurance could cover the cost to replace the equipment, clean up and repair the break-in, totalling $50,000.

Frequently asked questions

Are Life Insurance Agents required to carry E&O insurance?

Yes, in Canada, E&O Insurance is mandatory for Life Insurance Agents. You’ll need to get E&O insurance before you can apply for your licence to sell life insurance.

What is the minimum E&O coverage requirement for Life Insurance Agents?

Provinces have different minimums for E&O coverage, so check with your broker if you need confirmation on the coverage requirements. In Ontario, for example, you must have a minimum of $1,000,000 coverage per occurrence, with extended coverage for fraudulent acts.

What are the consequences of not having the required E&O insurance coverage?

If you fail to hold an active E&O insurance policy, it can result in consequences such as an administrative monetary penalty or a revocation or suspension of your licence to sell life insurance.

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