Protection from Everyday Mistakes

E&O Insurance“Protection from everyday mistakes.” It’s a prosaic phrase with profound meaning once you start thinking about it. “Everyday mistakes” refers on the surface to the small errors & omissions that nearly every business professional makes at one time or another.

  • Failing to fill out a form correctly.
  • Forgetting to return a client’s phone call.
  • Not scheduling a follow-up client meeting as promised.

None of these mistakes sounds particularly ominous. And most will have no practical consequences except, perhaps, for dinging a business owner’s reputation.

But—and this is a big “but”—a small percentage of these common errors can lead to serious consequences that harm a client financially and that may eventually lead to a big-ticket lawsuit. Think about it. Your mistake in filling out an insurance application isn’t a huge deal until it delays the issuance of a client’s insurance coverage, leaving the person uninsured for a catastrophic illness. Or your failure to return a phone call is irrelevant until a client’s business insurance fails to perform as expected because you failed to conduct a much-needed risk analysis. And not scheduling a client review session is inconsequential until a client dies shortly afterward with no life insurance in force.

In short, everyday mistakes happen all the time, but their impact can be anything but routine. Protecting against these situations is what E&O insurance is all about. It provides the cushion against everyday errors that allow financial professionals to continue in business even after getting hit with—and losing— a massive client lawsuit.

Coverage of Fees and Lawsuits

Once a financial professional’s mistake sparks a devastating lawsuit, business professionals will likely react with shock and confusion.  Shock because it inevitably surprises people that a client with whom they have served for months or years—and who seemed perfectly content—is now suing them. The reality is that not all client relationships are what they seem. They may appear to be amicable on the surface, but a series of minor errors—or one large one—can eventually undermine the relationship. Even though receiving a notice of lawsuit may come as a surprise to the defendant, the plaintiff, despite having a smiling face, might have been unhappy and planning to take legal action for months, if not years.

Confusion is another common reaction, particularly for financial professionals who’ve never been sued before:

  • What do I do?
  • What should I tell my aggrieved client?
  • Should I try to negotiate a settlement before the matter even gets to court?
  • What information do I need in order to prove my innocence?
  • How will I do all this while still handling my regular duties in the business?

All of these questions will be swirling in a financial professional’s mind in the hours and days after getting sued. Worse, making another mistake in responding to the lawsuit can compound the financial damage of getting sued in the first place.

This is why having E&O insurance is so important. Professional liability insurance policies are designed to minimize the shock, confusion, and financial impact of getting sued. Within days of you filing an E&O claim with your insurer, it will select and pay for an attorney to defend you. This person will guide you in terms of what information will be needed to marshal your defense. He or she will also handle all communications with the plaintiff’s attorney so that you don’t have to worry about what to say and do.

What’s more, your insurance coverage will also provide access to a professional E&O claims adjuster, who will manage the process of resolving your claim. This person will co-ordinate with your attorney and with the opposing parties to make sure the matter is resolved as quickly as possible.

But getting help from an attorney and E&O claims adjuster isn’t the only benefit of having E&O insurance. Your policy will also pay for a number of ancillary charges that can add up, especially with complicated lawsuits. These include:

  • Expert witness charges,
  • Copying, filing, and software-related expenses,
  • Arbitration or mediation costs,
  • Expenses related to settling the claim.

Most importantly, E&O insurance will provide a financial backstop to you should a judge find you guilty of negligence. If the judge sides with the plaintiff and orders you to pay damages, your E&O policy will cover that payment, up to the limits of your policy. Since this payment can total thousands if not hundreds of thousands of dollars, the ability to transfer this liability to an insurer is literally worth its weight in gold.

In short, operating a business can be an inherently risky proposition. In most cases, everyday mistakes will have no financial impact. But in rare cases, they can generate substantial financial demands that uninsured business professionals will be hard-pressed to meet. This is why having E&O insurance can not only preserve your personal financial security but, also ensure the very survival of your business.

For more information about securing E&O insurance for your business, visit today for more information. 

Don’t Be a Victim of Errors & Omissions

It’s a given that financial professionals make mistakes. They’re human, after all. The key is for them not to become a victim of their own errors and omissions. Let’s consider that statement a bit further.

It’s totally natural for insurance, investment, and real estate professionals to make errors and omissions. Why? Because every day they . . .

  • address complex problems,
  • are required to follow highly demanding regulations, and
  • operate in an environment of uncertainty and rapidly changing technology.

Given these forces, it’s a wonder financial professionals don’t make more mistakes than they do.

The issue isn’t that they make mistakes. The problem arises when they become a victim of their mistakes. This can happen in two different ways:

First, financial practitioners sometimes make a mistake and then shrug it off. Rather than assess why they erred in order to prevent it from happening again, they just put the whole incident behind them. In this scenario, an unwillingness to reflect on one’s mistakes and to make adjustments in business practices can trap financial professionals in a perpetual cycle of errors & omissions.

Second, failing to learn from their mistakes can be compounded by not having the proper amount and/or type of E&O insurance in place. Without appropriate liability protection, financial professionals become victims once again. They’re forced to pay out of their own pockets for legal judgments, legal fees, and court costs potentially amounting to tens, if not hundreds of thousands of dollars. By failing to protect themselves, they run the risk of losing their firms, their savings, and their financial security. They become victims of self-created mistakes, and it’s not a pretty sight.

There’s a better way . . . purchasing quality and affordable E&O insurance.

What Can a Full Policy of E&O Insurance Do for You?

Errors & Omissions

The key to not becoming a victim is advance planning. Financial professionals must acknowledge that . . .

  • the risks of getting sued are large,
  • that the potential costs of losing a client lawsuit are immense, and
  • that sensible business professionals arrange to transfer their liability risks to an E&O insurer in order to make them more manageable.

At the end of the day, thinking proactively and realistically about client lawsuits is the ultimate way to avoid victimhood.

So what can a full policy of E&O insurance do for you? In a nutshell, E&O insurance provides financial protection for your business. It generates funds that cushion the financial outcomes of losing a client lawsuit. It does this by providing money . . .

  • to pay for an attorney,
  • to cover the expense of legal judgments and settlements, and
  • to cover court costs that may be levied against you.

By having comprehensive E&O insurance protection, financial professionals avoid becoming personally liable for the direct and indirect financial implications of their error & omissions, up to their policy’s limits.

E&O insurance also provides two less obvious benefits. First, it provides assistance from a highly trained, professional claims adjuster who will help investigate and settle the claim. This allows financial professionals to continue working in their business rather than having to focus on dealing with a client complaint and/or lawsuit. Second, having E&O insurance means financial professionals don’t have to obsess about the financial risks of getting sued. They can simply concentrate on doing great work for their clients without endlessly worrying that their words or actions might spark a lawsuit.

Get Your Full Errors & Omissions Insurance Policy Today

The essence of victimhood is letting external events hijack one’s life. Financial professionals who take control of their destiny will never be victims, in part because they arranged to purchase a full Errors & Omissions policy at the earliest opportunity. How to best proceed? By looking into comprehensive and affordable E&O insurance from online providers who make shopping for coverage quick and convenient. One such entity is

Sponsored by the National Ethics Association, provides a user-friendly platform for financial professionals to easily shop for and purchase high-quality E&O insurance protection. Their website helps professionals buy E&O coverage directly from an insurer without having to go through a broker. Using the firm’s class-leading online shopping platform, agents and advisors can quickly select their desired coverage level and then “click and bind” their policy in minutes. What’s more, buying through means they never hassle with shopping delays, hidden fees, or deductibles (for life/health policies only).

Bottom line: financial professionals who wish to never become E&O victims must take control of their futures. They must do their best to prevent mistakes. But if they do make one, they should learn from it so they never repeat it in the future. And most importantly, they should purchase E&O insurance so that a mistake never becomes a permanent financial catastrophe—for their business, for their families, and for their financial security.

E&O Insurance

The benefits of E&O insurance aren’t what they seem initially. Many financial professionals view E&O insurance as a way to protect themselves against client lawsuits. If they win in court, their policy will pay for their attorney fees. If they lose, it will cover the cost of the legal judgment, along with court expenses. Is that all there is? Hardly.

The benefits of E&O insurance include a host of additional direct and indirect provisions, all designed to preserve an insurance, investment, or real estate professional’s financial viability, both today and decades from now. Let’s discuss a few of these “hidden” benefits.

In terms of direct benefits, E&O insurance policies typically not only pay for attorney fees, but also for:Errors & Omissions Insurance

  • Expert witness charges,
  • Copying, filing, and software-related expenses,
  • Arbitration or mediation costs, and
  • Expenses related to settling the claim.

When you add the above cost items to the expense of hiring an attorney and potentially of paying for a large legal judgment, financial professionals might face tens of thousands, if not hundreds of thousands of dollars, in claim expenses. E&O insurance policies are designed to transfer these obligations from the insured to the E&O insurance company.  When compared to the direct financial exposure of losing in court, paying for E&O insurance premiums makes a lot of business sense. It allows financial professionals to trade a potentially catastrophic and highly unpredictable expense for a much smaller, more predictable expense. Most business people find this a trade well worth making.

What about indirect benefits? In addition to providing cash to pay for the financial aftermath of a successful client lawsuit, E&O insurance policies also provide three non-financial benefits.

  • The first is the ability to have an E&O insurance claims adjuster on your case to facilitate the investigation and settlement process. This person teams up with your attorney to handle all of the steps involved in negotiating with the plaintiff and in tracking your case’s progress through the legal system. Without E&O insurance, you’d have to handle all this work yourself, reducing the time available to work on your business. “Many financial professionals who are fighting a major client lawsuit find it difficult to focus exclusively on their normal work,” says Steven R. McCarty, Co-Founder and Chairman of and of its sponsor, the National Ethics Association (NEA). “As a result, their compensation often plummets during this time, causing significant financial hardship.”
  • The second indirect benefit of having E&O insurance is the ease of mind that comes from knowing you’re protected against potential client lawsuits. Knowing you don’t fully “own” the risk of getting sued can reduce your stress and make it a lot easier to sleep well at night and to work productively during the day. “Similar to having good health, you simply can’t put a price tag on peace of mind,” says NEA’s Steve McCarty.


  • The third indirect benefit relates to helping financial professionals avoid the errors and omissions that generate legal action. At, all insureds receive extensive ethics and compliance guidance that helps them not only do business the right way from a moral perspective, but also in a way that does not violate industry regulations.

How does this work? To qualify for E&O insurance from, financial professionals must first join National Ethics Association. Membership provides a number of important privileges, including:

  • The ability to stamp their business with the “ Registered Member” seal, which enhances online reputation.
  • The opportunity to purchase a Certified Background Check on themselves and their business, which builds consumer trust and shortens the sales process.
  • Visibility in the NEA Member Directory, which can generate traffic back to the professional’s own website.
  • Access to hundreds of local and national discounts for their business or home, which saves money.

But the most important indirect benefit of E&O insurance is access to NEA’s loss-control guidance. This comes in the form of ethics and compliance educational content that motivates advisors to follow ethical and compliant business practices. This information can be found in the “Ethics Center” at Plus NEA also frequently shares this guidance with members via their periodic newsletters and bulletins.

By knowing how to treat their customer right and how to follow all relevant regulations for their license type, financial professionals will greatly reduce their risk of getting sued. This may well be the most powerful E&O insurance side benefit of all.

E&O Insurance

Many financial professionals ask themselves, “When is the right time to take out an E&O insurance policy?” As with many things in business, the answer is, “it depends.”

On one level, the answer is cut and dried. Almost all insurance or financial advisors who are in business for themselves should have E&O protection. Why? Because adverse legal judgments can put them out of business if they lack the personal financial resources to pay for them. And even if they win in court, paying for legal fees can be challenging even for those making a good living.

But there are at least five times in which having E&O insurance is even more important than usual. Let’s review each one:

  1. When you first go into business. At this point, agents or advisors will typically have a lower income and fewer assets than those who are more established. At the same time, their knowledge base may be shallower. Consequently, they may be at higher risk of making a mistake than more experienced professionals are. The combination of fewer resources and greater risk adds up to a compelling reason for new agents to purchase E&O insurance. If that weren’t enough, inexperienced agents might want to consider what’s at stake were they to lose an E&O claim in court. According to a major E&O insurance underwriter, the average claim cost for life insurance disputes is about $40,000. That number grows to more than $70,000 for pension-related claims and to $150,000 for disability-insurance lawsuits. Agents with limited assets and income would be hard-pressed to make good on legal judgments such as these.
  2. When you add a new product-type to your portfolio. Even though advisors might have years of experience, beginning to sell a new product can be risky from an E&O insurance perspective. If they fail to understand how the products work and for whom they are best suited, they can easily make mistakes that spark E&O disputes. In an environment that is tilting more heavily toward fiduciary best practices, recommending a product that isn’t in a consumer’s best interests can have devastating legal and financial consequences.
  3. When you enter a new consumer market (example: providing disability insurance to physicians). Agents with extensive experience with one type of consumer might decide to diversify into another segment. The problem is, they might not fully understand consumer needs and expectations in this segment and either recommend the wrong product or provide inappropriate levels of service.
  4. When you have decades of industry tenure and have grown a highly successful business. In this case, you’ll probably have a deep knowledge base and fully understand the needs of your buyers. However, being successful makes you a litigation target because clients and their attorneys assume you have greater ability to settle lawsuits. In other words, the greater your financial resources, the larger the litigation target on your back.
  5. When you are too busy to defend yourself against nuisance claims. Sadly, more and more consumers are bringing nuisance claims against their financial providers. They and their attorneys assume that most E&O insurers will simply settle claims for $25,000 or $50,000  just to make them go away. Without having an E&O insurer—and claims adjuster—in their corners, busy financial professionals can easily spend hundreds of hours defending themselves against nonsense disputes. For these individuals, buying E&O insurance shields them from the hassles and expense involved in such cases.


In the above five scenarios, E&O insurance provides the money and expertise necessary to defend financial professionals against client lawsuits, both legitimate and bogus. E&O insurance provides money to pay for attorney fees, to cover the cost of legal judgments and settlements, and to pay the court for its expenses. Agents and advisors who have been sued can attest to the value of having E&O insurance: less worry, less stress, and less time spent negotiating with unhappy clients. For most individuals, achieving those benefits is well worth the cost of E&O insurance.

However, understanding the value of E&O insurance at certain times of a financial professional’s career is just the beginning. The challenge then becomes to buy quality, affordable E&O coverage as conveniently as possible. Many financial advisors find that online E&O programs are a great way to get E&O protection at a reasonable cost and with a minimum of time and effort. is one such firm that has emerged in recent years.

Launched in 2008, provides E&O insurance for life/health insurance agents, property-casualty agents, registered investment advisor representatives, and real estate agents and broker-owners. It has pioneered the use of online shopping to make buying E&O insurance easier and simpler than ever before.

Given the risks insurance and financial professionals encounter over the course of their careers, there isn’t just one right time to purchase E&O insurance; there are many right times based on an agent’s specific needs and challenges. The key point is this: financial professionals who wish to do business responsibly—protecting their businesses, their families, and their future financial viability—rely on E&O insurance to keep them safe. What about you?