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What to do about E & O insurance when your broker goes out of business?

With so many brokerages going out of business these days, how do you make sure your past deals will be covered by E & O insurance when your brokerage goes out of business? Or, your broker simply decides it's time to retire? Hopefully, your broker thought about buying a tail end policy before they close down. A tail end policy will cover any prior acts for usually 3 to 5 years after your broker closes store. It would be a wise thing for the broker to do, if not just for peace of mind.

Posted by Kathy Low on 02/12/2009 08:49 PM

Comments (7)

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7 Comments on What to do about E & O insurance when your broker goes out of business?

FEB

Great info. I have never thought about that.

I had not thought of that either. I guess ex-brokers who are out of business are an issue as well.

I am the broker owner of a small office. Recently another broker in the neighborhood closed his office and merged with us. He is continuing to pay the premium on his own past acts coverage, and he plans to do so for the next couple years.

Anyway, if your broker ran a small independent office, his or her monthly premium may not be that big ... a few hundred dollars a month, maybe.

I wonder if you and any other of the orphaned agents could get together and contact the E&O company, and arrange to continue paying for the coverage for a few years.

Or, if you are an experienced agent, and other offices might be competing to sign you up.... maybe you could cut a deal with your new broker to pay the old E&O coverage for a while.... I'd certainly consider it for a really "hot" agent. :-)

FEB

Yikes, never thought of that.

Our broker is strong but I am going to ask the what if question anyway.

FEB

I'm looking to change my E&O insurance carrier and I'm interested in finding an insurance agent that provides the pay by transaction option. I've found one, but I wanted to talk with at least one or two other insurance agents before I decide. Any suggestions?

Also, I started a California Independent Broker group to help brokers share information. FYI.

FEB

I had not thought about this. My past broker closed down in August 08 and I am really sure he did not pay any premiums to close out our E&O this is not sitting well.... I could of gone a long time without thinking about this. But, I guess I am glad to know it too. Time to do some research.

Best,

Scott

MAY

Good thought..I know its a "business necessity" but in some states its not a requirement but if the agent paid for it, you'd want to know..

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