LLQP Ethics & Professional Practice · Component 1.1 · 60% of the exam
Errors and omissions (E&O) insurance for agents:
- ACovers fraud and intentional wrongdoing by the agent, so clients are protected whatever the agent does
- BReplaces the need for care, since any loss caused by poor advice is paid by the E&O insurer
- Is a licence condition in most provinces and covers claims for negligent advice, excluding fraud
- DIs optional everywhere, since the regulator relies on the sponsoring insurer to cover the agent's errors
Correct answer: C) Is a licence condition in most provinces and covers claims for negligent advice, excluding fraud
E&O is a licensing requirement in most jurisdictions with minimum limits. It does not cover intentional wrongdoing.
Why the other options are wrong
- AE&O policies exclude fraud and intentional wrongdoing.
- BIt compensates; it does not excuse negligence.
- DIt is mandatory in most provinces.
Exam tip
E&O: mandatory, covers negligence, excludes fraud.
Common mistake
Letting E&O lapse while remaining licensed.
What this tests
CISRO competency component 1.1 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.