Reference
E&O Insurance Glossary
Plain-language definitions of errors & omissions insurance terms for licensed insurance agents in Missouri and Kansas.
- E&O Insurance (Errors & Omissions Insurance)
- Professional liability coverage that pays defense costs and damages if a client alleges that a licensed insurance agent made a professional mistake, omission, or breach of duty in providing insurance services. Also called professional liability insurance.
- Claims-Made Policy
- A policy structure where the policy in force at the time a claim is made — not at the time the alleged error occurred — is the one that responds. Most agency E&O is written on a claims-made basis. This makes continuous coverage and correct retroactive dates critical.
- Prior Acts Coverage
- Coverage for professional services performed before the current policy start date, back to the retroactive date. When switching E&O carriers, preserving your prior acts coverage ensures you don't create a gap for work done under the old policy.
- Retroactive Date
- The earliest date from which professional services are covered under a claims-made E&O policy. Work performed before this date is not covered, even if a claim is filed after the policy is in force. Sometimes called the "prior acts date."
- Per-Occurrence Limit
- The maximum amount the carrier will pay for any single covered E&O claim, including defense costs and damages. Most carrier appointment agreements specify a minimum per-occurrence limit (commonly $1M).
- Aggregate Limit
- The maximum total amount the carrier will pay for all covered claims during the policy period. Once the aggregate limit is exhausted, no additional claims are covered for that policy year. Usually expressed alongside the per-occurrence limit (e.g., "$1M/$1M").
- Deductible
- The amount the insured pays out of pocket per claim before coverage kicks in. E&O deductibles vary by carrier and program. Some policies apply the deductible only to damages; others apply it to both damages and defense costs.
- NPN (National Producer Number)
- A unique identifier assigned to licensed insurance producers by the National Insurance Producer Registry (NIPR). Required on E&O applications and used by state departments of insurance to verify license status.
- Insurance Producer
- A licensed individual or business entity that sells, solicits, or negotiates insurance contracts. The term "insurance producer" is used in most state statutes and includes agents and brokers. E&O insurance is a professional liability product for insurance producers.
- E&O Lapse
- A period of time during which an insurance agent has no active E&O coverage. On a claims-made policy, a lapse means any claims filed during that period have no E&O carrier to respond. A lapse can also result in carrier appointment suspension or termination.
- Certificate of Insurance (COI)
- A summary document issued by an insurance carrier or producer that evidences coverage. Carrier appointment agreements often require a current E&O certificate of insurance on file. Your SmartEO account portal provides downloadable certificates once your policy is issued.
- Professional Liability Insurance
- The broader category of insurance that covers professionals against claims of negligence, errors, or omissions in performing their professional services. For insurance agents, professional liability insurance and E&O insurance refer to the same coverage.
- Surplus Lines
- Insurance placed with non-admitted carriers (those not licensed in the state) when coverage is unavailable from the standard admitted market. Agents placing surplus lines need specific surplus lines authority, which can affect E&O placement and underwriting.
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