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Is E&O Insurance Worth It For Independent Adjusters?

Being an adjuster has its own charm. As an independent adjuster, you have the opportunity to earn a lot of money, all the while, helping people rebuild their lives. If you are someone who works specifically as a CAT adjuster, nothing gives more joy and satisfaction than being able to help people whose accommodation as well as lives have been completely destroyed by a major hurricane.

The better you are at handling multiple claims the larger commissions you receive as you progress in your career. With the absence of a strict 9–5 schedule like an average professional, you get to choose who you are as an independent adjuster and work your way up the professional ladder. Working essentially as mediators between the insurance company and policyholders, independent adjusters are the linchpin of the entire claims management process.

However, with all these advantages as well as the ability to capitalize on your income potential, there are certain aspects of independent adjusting that lack the security provided by a regular job.

One such crucial area is insurance. Independent adjusters largely have to buy their own insurance instead of the IA firm they affiliate with providing it to them. As an independent claims adjuster, you would want to have some sort of professional liability insurance and that is where E&O insurance kicks in!

What is E&O insurance?

Errors and omissions insurance, also known as E&O insurance is essentially designed for professionals who have a temporary or contractual role in their organizations. It is a form of professional liability insurance that protects independent adjusters against claims of inadequacy or negligent conduct.

While negligence is a very difficult thing to prove, in the worst-case scenario if there is even the slightest chance that you are liable in the capacity of an independent adjuster it is absolutely necessary for you to have E&O insurance to protect yourself against such claims.

Errors and omissions insurance often covers court fees and outside settlements up to a certain amount. This is generally fixed based on the kind of insurance contract you might have.

Benefits of E&O insurance:

As an independent adjuster, there are certain benefits of having E&O insurance. While it is highly unlikely that you may face a claim on account of being negligible with your inspections it is always safe to have yourself covered should a policyholder ever file a claim against you.

Having E&O insurance would also look good on your resume when you apply to IA firms for work as your insurance would deem you as less of a risk in their eyes. Given that most IA firms do not provide insurance to IAs, having E&O insurance would help you sell yourself better as an independent claims adjuster.

E&O insurance would also cover your legal and defense expense should you ever face a lawsuit and that is an amount you WOULD WANT to be covered in order to prevent yourself from being on the receiving end of a large settlement suit!

Limitations of E&O insurance:

As the name suggests, E&O insurance only covers business risks and lawsuits but when it comes to bodily injury or property damage during inspections, E&O insurance isn’t cut out to save you.

Let’s say you’re out on a policyholder’s roof inspecting damaged shingles and you had a fall which led to you hurting your back severely. Another scenario could be your laptop or other equipment failing you during a CAT event. For such scenarios, having General Liability insurance and Business Personal Property insurance helps in reducing the burden of huge costs.

As a rule, Independent claims adjusters should accompany E&O insurance with additional insurance like General Liability or Business Personal Property insurance. This comprehensive approach would help protect from a variety of liabilities that an independent adjuster might face in the professional world.

Having E&O insurance is the minimum basic that an independent adjuster should have. While not every IA would agree and would consider their inability to be held negligent for an inspection, it is always better to be safe than deal with a policyholder that just might sue!

We hope this guide has helped you assess whether having E&O insurance is worth it for you as an independent claims adjuster or not.