Loan Servicing Protection (E&O)
Even the most well-run lending operation is vulnerable to human error. TEJ Agency offers Loan Servicing Errors & Omissions (E&O) Insurance to help protect your institution from losses tied to clerical mistakes, compliance missteps, and administrative oversights. Whether it’s an unrecorded insurance lapse, a missed flood notice, or an escrow billing error, our E&O solutions give you peace of mind that a simple error won’t lead to significant financial loss.
Coverage for Common Errors in Day-to-Day Lending Operations
Our E&O programs are tailored to cover the key risk areas associated with loan servicing. These include documentation gaps, process failures, and communication breakdowns that could otherwise result in uninsured loss or regulatory liability.
Missed or Inaccurate Insurance Notices
If your institution fails to properly notify a borrower of insurance deficiencies or coverage requirements, this coverage helps protect you from resulting claims or losses.
Incorrect Insurance Escrow Handling
Mistakes in escrow billing, premium disbursement, or payment tracking can create gaps in coverage. Our E&O policy helps absorb these costs and shield your institution from related legal exposure.
Clerical and Data Entry Errors
Simple mistakes in borrower or policy data can lead to underinsurance or missed placements. E&O insurance is designed to cover financial loss resulting from internal processing errors.
Failure to Maintain Required Coverage
If your loan agreement requires insurance but you fail to enforce it or place lender coverage appropriately, our protection ensures you’re not fully liable for damage or loss.
Private Flood Policy Acceptance Liability
When accepting a borrower’s private flood insurance policy in place of NFIP coverage, lenders face additional compliance risk. Our Private Flood E&O product helps protect your institution if an accepted policy is later found non-compliant.
Why E&O Coverage is Essential for Financial Institutions
Shields Your Institution from Everyday Risk
Even small internal errors can result in costly claims. E&O protection helps absorb those risks.
Strengthens Compliance Across Lending Functions
E&O coverage supports CFPB, RESPA, and investor compliance when human error disrupts the process.
Builds Confidence in Your Operations
Having the right coverage in place shows borrowers, investors, and auditors that your institution manages risk responsibly.
Frequently Asked Questions
What is Loan Servicing E&O insurance, and why do we need it?
Loan Servicing Errors & Omissions (E&O) insurance protects lenders from financial losses resulting from mistakes made during the loan servicing process. This can include failing to send required notices, mismanaging escrowed premiums, or accepting inadequate insurance. Even with a strong team, small errors can lead to big liability—especially in regulated environments. E&O insurance provides a critical safety net that helps lenders operate confidently.
Is this coverage just for large institutions or also for smaller banks and credit unions?
Loan Servicing E&O coverage is beneficial for financial institutions of all sizes. In fact, smaller lenders may face more exposure due to lean staffing and limited resources for quality control. TEJ tailors every program to match the size, loan volume, and operational structure of your institution. Whether you manage thousands of loans or a few hundred, the risks are real—and so is the value of protection.
How does Loan Servicing E&O relate to lender-placed insurance?
While Lender-Placed Insurance protects the lender when a borrower’s policy lapses, E&O coverage protects the institution if it fails to act appropriately on that lapse. For example, if a borrower’s insurance expires and your team forgets to place coverage or send a notice, E&O steps in to cover resulting losses. These policies work together to create full protection for your loan portfolio and your servicing process.
What specific errors are most commonly covered by E&O insurance?
Common covered errors include missing or late borrower notifications, incorrect policy entries in loan records, improper handling of insurance escrow funds, and accepting non-compliant private flood policies. These aren’t just one-off mistakes—they can trigger audits, fines, or claims if left unaddressed. E&O insurance provides financial protection when these everyday errors lead to real consequences.
Can we bundle Loan Servicing E&O with other TEJ programs?
Yes. Most of our clients choose to integrate E&O coverage into a broader insurance risk management plan that may include Insurance Tracking, Blanket Insurance Programs, or JetTrack. This allows you to centralize your risk management strategy and ensure every aspect of your lending process is backed by coverage, technology, and responsive support.
