Final answer:
Insurance Agents need Professional Liability Insurance, or Errors and Omissions (E&O) insurance, to protect against negligence claims. This insurance covers defense costs and any damages awarded in a lawsuit. It's crucial for financial protection due to the nature of advising on insurance products.
Step-by-step explanation:
The type of insurance an Insurance Agent would need to protect against claims made against them or their agency due to negligent acts is called Professional Liability Insurance, also known as Errors and Omissions (E&O) insurance. This type of insurance helps cover the costs associated with defending against a negligence claim made by a client, and any damages awarded in such a civil lawsuit. Agencies and agents alike should consider this coverage to safeguard against the financial consequences of mistakes, omissions, or professional negligence.
Insurance in general is a method of protecting a person or entity from financial loss. In the context of an Insurance Agent, this involves paying regular premiums to safeguard against potential claims. Given the nature of the work, which involves advising clients on insurance products, there is a risk of being held liable for professional advice that leads to financial loss. Therefore, E&O insurance is essential for mitigating the risk and ensuring financial security.