Page 145 - The UnCaptive Agent

118 THE UNCAPTIVE AGENT

here. The first policy you will want to purchase is an
Errors and Omissions policy. There are brokers who
specialize in writing Errors and Omissions policies, and
the IIABA also has very attractive programs for agents
that they endorse. Contact your state’s Independent
Insurance Agents Association to inquire about Errors
and Omissions coverage. Remember, E&O insurance is
written on a claims-made basis. So, it is very important
that you choose your carrier carefully from the begin-
ning, as changing carriers is costly and complex.
What limits should you select? While new agencies
will be tempted to select as low a limit as they can find
to save money, this is obviously a mistake. Instead, you
should select a limit that is appropriate for the business
you intend to do. If you are a personal insurance agent
selling average homes and are very careful to always
offer excess liability limits to your private passenger auto
clients, you may feel comfortable with a limit as low
as $1 million. But $1 million may be inadequate. It’s a
decision that only you can make, but it’s one not to be
taken lightly and not one to be made solely based upon
a premium. You should instead make it based on what
your real exposure is. This business that you’re building
will become quite valuable to you, and its value can be
destroyed if you don’t insure your errors and omissions
exposure properly.
In the course of your career as an agency owner,
you must assume you will be involved in an E&O
claim. Almost every agency is. So, choose this cover-
age carefully.
You will also need to purchase a General Liability
policy. This policy should be inexpensive, as the pri-
mary exposure that your business will have is premises
liability, which is minimal. Along with your general
liability policy, you’ll initially need a very small limit for