Insurance for Insurance Agents

An insurance agent assists their customers by explaining coverage, giving claim scenarios and providing quotations that include the appropriate coverage for the customer. Some may specialize in personal lines insurance, for example, homeowners, tenant contents or auto policies. Others specialize on the commercial side, meaning they sell various policies to business owners such as general liability, workers compensation, or package policies.

But the question is, do insurance agents also need insurance? Yes, absolutely! Several types of insurance policies will protect the agent, their agency, and employees for certain types of covered claims. Due to the complex nature of the insurance industry, there are several policies that are recommended:

• Professional Liability
• General liability
• Property Insurance
• Cyber
• Commercial auto
• Workers compensation insurance

Let's go through some of the exposures an insurance agent may face:

• Scenario 1: Renewing clients policies - A client tells the agent to renew their policy and pays the agent for the annual premium. For whatever reason, the renewal request and premium payment do not get to the insurance carrier and the policy lapses. The client, unaware and uninsured, suffers a loss that would have been paid by the policy that didn’t renew. The client demands that the insurance agent fix the situation, including paying the claim and putting their insurance policy back in place. The agent’s Errors & Omission’s policy would respond to this claim lawsuits arising from the incident.
• Scenario 2: Bodily injury - A client visits the agent’s office and falls on the wet floor, breaking her ankle. Since she feels your office is negligent for her injury, she sues the agent and business for her medical costs, pain and suffering and lost wages resulting from her fall. General liability coverage will respond to her lawsuit.
• Scenario 3: Cyber Attack - Insurance agents must collect a lot of information in order to write an insurance policy, some of which would be protected “private information”, such as a driver’s license number, auto infractions for a business auto policy or owner’s social security numbers on a workers compensation policy. This information, often stored in the online agency management system, opens the agent to cyber-attacks in which their clients’ personal information is compromised and may be held for ransom. The agency management system could also suffer damage during the attack. Cyber coverage would respond to these types of claims.

An insurance agent knows that general liability insurance only covers bodily injury and property damage liability to third parties, limited personal and advertising injury and sometimes medical payments but it doesn’t provide the agent the most comprehensive protection. Therefore, the policies that are listed below should be considered as well.

Professional liability (E&O)

This policy will cover third party claims arising from the unintentional error or omission made by the insurance agent that causes a financial loss to the client. For example, the mistake made by not renewing a policy or explaining coverage incorrectly, either may result in an uninsured loss to their client.

Cyber Liability

Most cyber policies include both first and third-party coverage. First party coverage includes cyber incident response expenses, cyber-crime (funds transfer fraud, extortion), system damage and business interruption. Third party coverage includes network security and privacy liability, legal defense, regulatory fines, PCI fines, and media liability. This policy is also referred to as cyber risk insurance. Moreover, as an agent, you will spend less time worrying about those cyber threats and more on what matters most – your customers’ wellbeing.

Commercial auto

Commercial auto insurance is different from personal auto insurance, so be sure if you regularly use your auto for business purposes, taking clients out for lunch or picking up office supplies, that your personal auto carrier knows how the vehicle is used so they can add a necessary endorsement or rewrite to a business auto policy so a claim doesn’t get denied. Both auto policy types provide the same type of coverage although the underwriting requirements and qualifications for each policy are different.

Workers compensation insurance

Workers compensation may be required in your state, it will depend on the number of employees, owners and the business entity type so check your state’s requirements. Workers compensation pays medical costs and a percentage of lost wages for the  employee resulting from an “on the job injury as well as state mandated death benefits to the family.

The comprehensive costs for insurance agent’s policies vary based on many factors, a few include:

• Annual Revenue
• Location and assets insured
• Annual payroll
• Types of insurance sold and services provided
• Number of Clients