Top 7 E&O Risks for Insurance Agents & Brokers in 2026

Could your next email or AI-assisted report trigger a costly E&O claim in 2026? Errors and Omissions (E&O) risk isn't usually one massive blunder; it's a chain of small oversights like missed details, unclear emails or outdated tech that snowball into professional liability nightmares.

As we approach 2026, these breakdowns are surging. Professionals are juggling faster workflows, multiple AI tools and demanding clients who expect flawless results instantly. This shift is driving up E&O claims: professional liability limits in the $5MM-$20MM range are growing at a 14.9% CAGR due to intensifying claims, and 85% of carriers report rising severity from emerging risks like AI and economic uncertainty.

Grasping these professional liability trends allows you to act now before a claim hits. Below, we break down the top 7 E&O risks for 2026, with real-world examples, stats and actionable strategies to slash your exposure.

Why Are E&O Risks Evolving So Rapidly in 2026?

The nature of professional work has changed dramatically over the past few years. 80%+ of communications are digital, client interactions are remote and documentation scatters across apps. Yet, regulations continue to tighten and expectations soar while clients demand instant, error-free service.

Accountability also hasn't budged. You're still on the hook when things go south. Going into 2026, E&O isn't about skill gaps anymore; instead, it's operational overload. Competent insurance agents and brokers get hit hardest without updated systems. Predictions show AI-driven risks (e.g., biased recommendations) could spike claims percentages significantly in the coming years, so it is important to act now to mitigate emerging risks.

What Are the Top 7 E&O Risks in 2026?

Disclaimer: The scenarios described below are illustrative examples based on common professional liability claim patterns. Coverage availability and outcomes depend on specific policy terms, conditions and circumstances.

1.     Miscommunication in Digital and AI-Assisted Workflows

Could an AI summary cost you thousands? Digital tools and AI boost speed but breed misunderstandings, and clients misread emails without context while AI outputs lack nuance. This creates an environment ripe for miscommunications to occur.

Example scenario: An insurance agent used AI quoting software to recommend a life policy, but biased outputs missed health exclusions, causing denied claims and a six-figure negligence suit.

How to reduce exposure:

• Always confirm client understanding in writing after AI-assisted recommendations
• Clarify assumptions and limitations upfront
• Manually review every AI-generated client-facing document before sending

When expectations are not aligned, misunderstandings can quickly turn into allegations of negligence. Reducing this risk starts with slowing down critical communication. Professionals who take time to confirm understanding, clarify assumptions and review all client-facing content before delivery are far less likely to face disputes later.

2.     Documentation Gaps Created by Speed and Convenience

Why do rushed records lead to undefendable claims? Fast deadlines mean verbal approvals, text-message changes and “I’ll update the file later” moments never get properly documented, especially when communication can be split between text, email, phone calls and more.

Because fast turnaround times are now expected, documentation gaps often become the first casualty when professionals feel pressure to move quickly. When disputes hit, no paper trail means a weak defense.

Example scenario: An insurance broker failed to document a policy change, resulting in denied coverage after a client loss and a $250k+ settlement.

How to reduce exposure:

• Log every approval and change in writing (email is fine)
• Use a centralized CRM or shared drive; no loose Slack or text threads
• Treat documentation as part of the deliverable, not an afterthought

The best-protected professionals against E&O claims are those who treat documentation as part of the service, not an administrative afterthought.

3.     Scope Creep and Blurred Professional Boundaries

When does "helpful advice" become a liability? Minor add-ons blur lines, turning favors into obligations. Scope creep remains one of the most common contributors to E&O claims. Clients often ask for additional guidance that feels minor in the moment but falls outside the original agreement or licensed role.

Example scenario: An agent discussed adding additional coverage during a client conversation but did not complete a formal application or update policy documents. When a loss occurred that fell outside the existing policy, the client claimed the agent failed to secure requested coverage. Allegations tied to unclear scope or undocumented changes are a common trigger for E&O claims, subject to policy terms and conditions.

How to reduce exposure:

• Define scope clearly in every engagement letter or application
• Require signed apps or written change requests for anything new
• Conduct quarterly scope reviews with larger clients

Clear engagement terms, periodic scope reviews and written updates when responsibilities evolve are among the simplest and most effective risk controls available.

4.     Evolving Compliance and Regulatory Expectations

How do outdated rules catch pros off-guard? Compliance requirements are not static and licensing standards, disclosure rules, record retention requirements and continuing education expectations continue to evolve across professions. In 2026, many E&O claims will stem not from technical errors, but from failures to meet updated administrative or regulatory standards. Even minor oversights can have significant consequences if they contribute to client harm.

Example scenario: A broker failed to use a newly required disclosure form when placing a product for a client. Although the advice itself was appropriate, the client later alleged they were not properly informed, resulting in a professional liability claim.

How to reduce exposure: while regulatory fines are often excluded, allegations of negligence tied to compliance failures may trigger E&O defense, depending on circumstances. To prevent against this:

• Conduct regular compliance reviews.
• Stay current on regulatory updates.
• Document compliance efforts and disclosures.

Professionals who build regular compliance reviews into their annual routine are better positioned to adapt before issues arise.

5.     Rising Client Expectations and Reduced Tolerance for Errors

Why is client impatience a growing E&O trigger? Today’s clients expect fast responses, clear communication and seamless service. When those expectations are not met, patience is limited. Those demands for speed mean small slips can escalate fast.

Example scenario: An agent confirmed coverage was bound but did not clearly explain when certain endorsements would take effect. When a loss occurred before the endorsement became active, the client alleged misrepresentation. Claims involving unclear effective dates or misunderstood coverage terms are a frequent source of E&O allegations.

How to reduce exposure: Set expectations early.

• Communicate proactively.
• Update during delays.
• Align on timelines and confirm effective dates.

Consistent communication, expectation setting at the outset of engagements and proactive updates during delays all play a critical role in preventing misunderstandings from becoming disputes.

6.     Reliance on Third-Party Technology and Vendors

What happens when vendor failures pin blame on you? Many professionals rely on external platforms to deliver services, manage data or meet deadlines, sometimes using quoting tools or CRMs to increase business speed. When those systems fail, clients rarely distinguish between vendor error and professional responsibility, meaning those outages or errors get attributed to your oversight.

Example scenario: A technology outage delayed a submission past a policy expiration date. When a loss occurred, the client alleged the agent failed to maintain coverage. Depending on policy language and facts, E&O claims may arise when professional services are alleged to have been impacted by third-party tools used in the ordinary course of business.

How to reduce exposure: Vet vendors rigorously.

• Document dependencies on external platforms.
• Have contingency plans in place.
• Clarify liabilities in contracts.

Understanding where third-party dependencies exist and documenting those relationships helps reduce confusion and liability when problems occur.

7.     Growing Overlap Between Cyber Incidents and E&O Claims

How do hacks turn into professional negligence? Cyber incidents increasingly intersect with professional liability. A misdirected email, compromised system or data exposure can quickly raise questions about professional judgment and safeguards. In these situations, what begins as a technical issue often becomes an allegation of negligence. Clients want to know not just what happened, but whether it could have been prevented. Data breaches question your safeguards. An AI-enabled world is expected to escalate phishing.

Example scenario: An agency experienced a phishing incident that exposed client information. Affected clients alleged the agency failed to implement reasonable safeguards, leading to a professional liability claim alongside cyber-related allegations. Situations like this highlight the importance of understanding how E&O and cyber coverage interact.

How to reduce exposure: Integrate cyber into E&O plans.

• Align data handling practices.
• Train on threats frequently.
• Document protections.

Professionals who align their cyber practices with their E&O risk management are better equipped to handle these scenarios when they arise.

Quick Reference: E&O Risks vs. Mitigations in 2026

Who Is Most at Risk for E&O Claims in 2026?

Exposure peaks for insurance agents, brokers or RIAs handling policy advice or client data. For agents, E&O claims rank second in frequency amid 2025's digital shifts. The more clients trust your coverage recommendations, the higher the stakes.

Simply put: the more clients rely on your judgment, the more important it becomes to anticipate how evolving risks may impact you.

How to Slash Your E&O Risks in 2026

Preparation starts with awareness, so start with a self-audit: Review coverage, workflows and docs. Strong E&O risk management is not about eliminating mistakes. It is about reducing the likelihood that small issues escalate into formal claims.

• Audit tech dependencies.
• Train on AI risks.
• Document everything.

Professionals who take time at year-end to evaluate their risk posture are far better positioned going into the new year.

When Should You Review E&O Insurance for 2026?

Right now, and every December, especially if services evolved. Check limits and exclusions against new risks like AI. Proactive gaps beat reactive regrets. After all, coverage that was appropriate in the past may no longer align with how you operate today.

Reviewing limits, exclusions and policy terms before renewal provides an opportunity to address gaps proactively rather than reactively.

Final Thoughts: Act Now to Prevent Next Year’s E&O Pitfalls

The biggest E&O risks in 2026 are not dramatic failures. They are everyday pressures compounded by speed, technology and rising expectations. Professionals who recognize these shifts and adjust early reduce their exposure and strengthen client trust at the same time. Adjust now to cut exposure and build trust. See NAPA’s E&O Policy Page for more information.

Visit NAPA's E&O Policy Details Page

FAQ: Common Questions on 2026 E&O Risks

What are the top E&O risks for 2026?

The biggest threats for insurance agents and brokers heading into 2026 are rooted in digital workflows, speed and emerging tech:

• AI-assisted miscommunication (e.g., biased quoting tools overlooking exclusions)
• Documentation gaps from rushed verbal changes
• Scope creep on verbal endorsements
• Evolving regulatory disclosures (e.g., new annuity suitability rules)
• Rising client expectations for instant, flawless service
• Third-party vendor/tool failures (e.g., rater outages delaying bindings)
• Cyber incidents blending into negligence claims (e.g., phishing exposing client data) 

How can I reduce E&O claims?

Focus on written confirmations, regular audits and tech training. Proactive steps slash exposure dramatically:

• Document everything in writing—use centralized CRMs, no loose texts/Slacks
• Manually review AI-generated quotes and recommendations
• Set clear scopes with signed apps and quarterly reviews
• Stay ahead of regs with annual audits and alerts
• Communicate proactively: confirm dates, updates and understandings
• Vet vendors and have backups
• Align cyber risk management practices with professional liability considerations.

Who needs E&O insurance most?

Insurance agents, brokers and agencies handling policy advice, client data or placements, especially independents and small firms without formal review processes. If clients rely on your recommendations for coverage gaps or suitability, you're at peak exposure. NAPA E&O policies start at just $26.25/month for qualifying agents.

Does AI increase professional liability?

Yes, significantly. AI tools speed quoting but introduce new risks like algorithmic bias (missing exclusions) or misleading automated responses. In 2025, agents saw rising claims from AI-driven errors; 2026 forecasts even more as adoption grows. Always double-check outputs and document reviews.

When to review coverage?

Right now, and every December. December is ideal before 2026 renewals. Review after any changes in services, tools (e.g., new AI platforms), or client base. Check limits against rising risks like cyber overlaps.