Corporate Coverage

Corporate vs Personal Coverage

Your Agent's E&O Insurance Policy Is Not Enough to Protect Your Firm

While your agent's E&O policy will protect you personally for claims brought against you or your unlicensed employees, your firm has limited protection under that policy. The same goes for other agents employed or contracted with your firm. In fact, the coverage for your firm is limited to "vicarious liability" (provided you've declared your firm on your agent's E&O insurance application).

In Common Law and under the Civil Code, the principle of vicarious liability establishes that an employer may be held liable for the conduct of its employees without there being proof of actual negligence.

However, should a claim be brought against your firm alleging negligence ("direct" liability), such as allegations of negligent hiring, negligent supervision or training, your agent's E&O policy won't respond to defend your firm. Neither will the policies carried by any of your employed or contracted agents.

Also, where a licensed agent has left the firm, or where the agent has failed to maintain individual E&O coverage, and a suit is brought against the firm alleging negligence on the part of the former employee, your firm could be called upon by the courts to respond.

Under these and many other such circumstances, your agent's E&O policy won't respond to protect your firm. Any legal expenses or court awards would be borne entirely by your firm.

Don't gamble by going without E&O insurance for your firm.