When it comes to Errors and Omissions insurance, choosing a policy based on price alone might save you money upfront, but it could cost you dearly in the long run.
We get that cost matters. But what matters more is what you’re getting for that price. Not all E&O policies are created equal, and the fine print can make a big difference when it comes to protecting your business, your reputation, and your future.
Here are a few key questions every independent financial professional should ask before committing to an E&O policy.
1. Does the policy cover everything you do?
It might surprise you, but some policies only cover a select list of products or services while leaving out some you might assume are included. Others are more broadly worded, offering better protection for the full scope of your work.
One area that’s often overlooked is referral business. If you refer a client to another professional, such as a mortgage broker, portfolio manager, or accountant, you could still be held partially responsible if something goes wrong, even if you weren’t directly involved in the transaction. Not all E&O policies include coverage for this kind of exposure.
Always double-check to ensure all aspects of your business are covered—not just the basics.
2. How far back does your coverage go?
Pay attention to your policy’s retroactive date. The retroactive date marks the start of your coverage period, but definitions vary between providers. If you switch insurers or let your policy lapse, you could lose coverage for work done in the past. Even a short gap between policies can leave you exposed to claims that arise down the line. Make sure you know your retroactive date and understand how any changes in coverage could affect your protection.
3. Will your policy defend you during a regulatory investigation?
You might think it will never happen to you, but disciplinary or regulatory investigations are more common than many professionals realize. A client complaint or regulatory review can turn into a major stressor—and expense. Not all E&O policies include defence costs for these investigations. Make sure yours does, so you’re not left to fend for yourself when it matters most.
4. What happens to your coverage if you retire?
Thinking about winding down your practice? You’ll still need coverage for the work you did while you were active. This is where Extended Reporting Period (ERP) coverage comes into play.
ERP allows you to report claims made after you’ve retired or stopped offering services, if the original work occurred while your policy was active. Without ERP, any claims filed after your policy ends could leave you or your estate personally liable. It’s an essential consideration for professionals planning their exit strategy or succession.
5. Does your policy meet regulatory requirements in your province?
Regulatory requirements for E&O insurance vary by province. Many provinces require your policy to include coverage for fraudulent acts.
If your policy skips this (or other required elements), you could be unintentionally non-complaint with your regulator. Staying compliant starts with knowing what your policy includes. Make sure your policy aligns with the expectations of your provincial regulator to avoid penalties or issues with licensing.
6. Are you covered if your assistant or team member makes a mistake?
As a business owner, you’re not just responsible for your own actions, but you’re accountable for your team’s as well. Whether it’s a licensed associate, administrative assistant, or office manager, a misstep by someone on your team could have consequences for your business.
Some policies exclude coverage for employees or contractors, leaving you on the hook for any errors they make. Look for a policy that includes coverage for your staff or team members to ensure you're fully protected.
7. Do you know how to report a claim properly?
While often overlooked, every policy has strict rules about how and when to report a claim. Failing to follow these guidelines could void your coverage entirely.
In some cases, even something as simple as discussing a potential issue with a client before notifying your insurer could jeopardize your coverage. Don’t wait until something goes wrong to find out the process. Make sure you’re familiar with the reporting guidelines in your policy and act promptly if something goes wrong.
The Bottom Line
Understanding your E&O policy now means avoiding disaster later. Protecting your practice isn’t just about finding the cheapest policy—it’s about finding one that’s built for the real risks you face as a financial professional.
IFB offers an E&O program designed with independent professionals in mind. Our exclusive member coverage goes beyond surface-level protection to meet the real-world demands of your business.
- Understand your policy
- Protect what you’ve built
- Get peace of mind you can count on
Want to learn more about IFB’s E&O options?
Request a personalized quote or contact Melanie Escarria of The Magnes Group, 1-800-650-3435 ext. 4305 or via email at mescarria@magnesgroup.com.
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