Life Insurance Advisors Insurance

What You Need to Know About Life Insurance Advisors Insurance

A life insurance advisor is someone who is licenced and regulated by the Financial Services Commission of Ontario (FSCO) to sell life insurance within the province of Ontario. Insurance advisors, also known as insurance brokers, work with several insurance providers to help their clients find the exact type of insurance they need for the best rate possible. 

But while you are helping your clients find the best insurance policies for them, you also need to ensure that you have your own insurance policy to protect yourself from potential claims of negligence or omission. Having a comprehensive business insurance policy is the key to protecting not just your clients but also yourself.

Insurance Coverage Options

As a life insurance advisor, your job is to help people understand the vital importance of having life insurance to protect themselves and their loved ones. But before you can begin, you need to get insurance for yourself. Sounds silly, right? But in accordance with the Insurance Act, all life insurance advisors in Ontario are required to have their own errors and omissions insurance policy. Thankfully, you can often apply for this through your brokerage’s insurance provider.

What is life insurance advisors insurance?

Life insurance advisors insurance is a customized insurance policy tailored to life insurance brokers. This policy is designed to protect their business from industry-specific risks, such as negligence, errors, omissions and lawsuits.

What is covered by life insurance advisors insurance?

Errors and Omissions (E&O) Insurance

Errors and omissions insurance, also known as professional liability insurance, is absolutely essential for any person offering a service. It can be the most important coverage for you to have. You could find yourself facing a lawsuit from a dissatisfied client at any point. Even a simple error or oversight could end up in a significant financial loss for your clients. In turn, your client may try to sue you to recoup their losses. 

These are just some examples of why all life insurance advisors in Ontario are required to obtain a specific amount of E&O coverage. This policy protects you against claims of misconduct, negligence, failure to deliver a service, inadequate work and more. Professional liability typically covers:

  • Errors, mistakes and oversights
  • Failure to meet deadlines
  • Failure to deliver your product/service as advertised
  • Professional negligence
  • Failure to meet a standard of care
  • Breach of contract

What’s excluded from life insurance advisors’ insurance coverage?

When you hear liability insurance, it’s easy to assume that means it covers anything you could be liable for. However, E&O insurance may not cover as much as you think. Here are some common exclusions from E&O insurance:

  • Insured vs. insured – claims made by two parties insured under the same policy are typically excluded
  • Dishonest, criminal, fraudulent or malicious acts
  • Bodily injury and property damage – this is covered under general liability insurance
  • Bankruptcy/insolvency
  • Guarantees, warranties, cost estimates
  • Infringement of copyright, patent, trademark, trade secret

Reading over your policy carefully or speaking with your insurance provider to learn what might be excluded from your E&O coverage is essential.

What other coverages should you consider adding to your insurance policy?

Crime and Fraud Insurance

In today’s age of technology, crime is more than just stolen office equipment. Nowadays, life advisors also have to be diligent against modern methods of crime, including electric fraud. Crime and fraud insurance offers broad coverage for crime-related losses that are not generally covered by liability policies. And, in the event that you are a victim of stolen office equipment, including your computer containing all of your client’s information, you will be protected. 

Cyber Insurance

Cyber and privacy liability insurance protects your business by covering damages and legal claims if your client’s personal information is leaked or stolen due to a data breach or theft. As client information is regularly saved online these days, and many life advisors have moved to hosting virtual meetings, this has become an essential insurance policy for life advisors to have.

General Liability Insurance

Some life insurance advisors will also acquire their financial planning certification and start their own businesses. General liability insurance protects you, your business (and your employees) from legal liability against third-party bodily injury or property damage claims that occurred while a client was at your office. It covers the costs of medical bills, legal fees, and repairs or replacements. This insurance policy also protects you against advertising and reputational injuries (e.g., slander, libel, copyright infringement).

Auto Insurance – Business Use

Some insurance advisors travel to their clients’ houses instead of having a brick-and-mortar office. These advisors will need to let their insurance provider know they will be using their vehicle for business purposes. You can likely add this to your personal auto insurance policy.

Tools and Equipment Coverage

Adding this coverage to your auto insurance policy will help cover your computer and supplies in the event they are lost, stolen or damaged. 

Is life insurance advisors’ insurance mandatory?

Yes. According to Ontario’s Insurance Act, regulation 663, section 17, all licenced life insurance advisors must have the following E&O insurance coverage:

  • A minimum of $1,000,000 to cover a single occurrence
  • A minimum of $2,000,000 in total
  • Extended coverage for loss resulting from fraudulent acts

Regardless of whether you are actively selling insurance, all licenced life advisors must maintain their E&O insurance throughout their licencing period. Failure to comply with any of these requirements could result in the loss of your licence.

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What are my requirements as a life insurance advisor?

All life insurance advisors are required to:

  • Be licenced to sell insurance by the Financial Services Regulatory Authority of Ontario (FSRA)
  • Follow the Ontario Insurance Act and regulations
  • Purchase E&O insurance to protect themselves and their clients 
  • Disclose to clients in writing any conflicts of interest they have
  • Disclose to clients in writing who they represent
  • Complete 30 hours of continuing education courses every two years to stay up-to-date on industry knowledge

Get a Life Insurance Advisors Insurance Quote Today

There are several variables that help determine the type of insurance that’s best for you. Luckily, as someone who sells insurance, you know the importance of finding a good broker. Let Insurance Hero help manage your risk and insurance cost by conducting a full commercial insurance policy review to determine what kind of coverage is best for you!

For reliable, affordable Ontario life insurance advisors insurance, please request a quote online or call us at 1-855-777-4376. Our team of insurance heroes is happy to answer any questions you have!