Errors and omissions (E&O) insurance is mandatory for licensed agents in every Canadian province. E&O provides professional liability coverage for claims alleging the agent's error, omission, negligence, or misrepresentation caused a client financial loss.
Minimum required coverage levels vary by province. A commonly cited threshold for individual life and A&S agents is $1 million per occurrence, though agents should verify the current requirement with their provincial regulator or managing general agent's group E&O plan.
E&O does not cover intentional misconduct, fraud, criminal acts, or penalties imposed by a regulator. It covers honest professional mistakes.
A managing general agent (MGA) or insurance company often offers a group E&O plan to contracted agents. This satisfies the provincial licensing requirement provided the plan meets the minimum coverage thresholds. Agents who leave the MGA must obtain their own coverage immediately; a gap in E&O coverage, even brief, may constitute a licence condition violation.
Common mistake: believing E&O applies to all claims against the agent, including regulatory penalties or client fraud allegations. E&O covers professional negligence, not deliberate wrongdoing.
Recall: What does E&O insurance protect an agent against? Name one type of claim E&O would not cover.