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E&O Avoidance and Prevention

“One River, 2 Currents: How the Standard of Care and Day to Day Reality Differ

“What are some of the additional problems raised however by following the concept of being only an order taker? You have a customer that comes in your office who says I have a business and I need insurance. What do you recommend? How does in the insurance agent or broker therein not give advice by answering the question. Are they supposed to say

“what is it you’re worried about? We have numerous commercial policies we could provide , then we could confirm we will provide it depending on what your needs are and as you know, you must have Worker’s Comp. Perhaps you might consider should insuring your property, or consider insuring your business for liability. What are your concerns and what are your needs? “

I can’t imagine any consumer of any kind would want to do business with a broker that would fail to advise them as to what might be needed. But let’s take it a step further. I don’t know any Insurance Broker that would advertise that they have no duty to advise, guide or direct clients as to the appropriate types of insurance coverages for its business operations. But there is another reality that is ignored. That is, your average insurance agent or broker with five years experience in any line, whether it be Personal Lines, like homeowners and auto, or Commercial lines knows more about the ins and outs and extensions to coverage of the insurance policy and what may be needed by an Insured than any Insured regardless of sophistication.”

COVID-19: E&O Backlash

During this unprecedented time of state-mandated business shutdowns and stay-at-home orders, you cannot afford to risk errors and omissions claims against your agency. An ounce of prevention now could be worth a pound of E&O cure in the future.

Cyber Risk & Insurance

Cyber Risk & Insurance

While cyber threats have been a concern for more than a decade, the last eighteen months have been marked by a number of large-scale cyber breaches. These breaches caused companies and insurers to expend considerable financial resources to recover from the breach and mend their damaged public images. As a result of the increase in cyber threats, public and private entities are scrambling to ensure the security of their systems and the information and data these systems store. As part of the risk management analysis presented by cyber threats, companies of all sizes are evaluating their existing insurance policies to understand what, if anything, traditional insurance policies will cover with respect to cyber claims. In most instances, obtaining additional
cyber coverage, either through special endorsement to existing policies or through a stand-alone cyber liability policy, is necessary.

Damian J. Arguello

Risk management & insurance thought leader & influencer, law professor, coverage counsel, & insurance expert witness.

Agents – Your E&O Coverage May Be For More Than You Think

Your responsibility to not breach your fiduciary duties to the principal (insurer) are a large part of your professional /ethical responsibilities and the reason for your E&O coverage as an insurance agent… and here you thought the Insurers demanded that you to carried E&O was only for the policyholde’s protection. 

A Review of the Modern Claims Made Form

“Since its creation, “claims made” wording’s use has expanded outside of the “profession” and professional liability realm, finding use in diverse liability coverages. But the roots of “claims made” wording, and its most common use still, is found in covering the exposures created by a “professional’s” activities. As seen by the list of true “professions,” professionals are individuals who provide a service to society which, if done poorly, could cause extreme or irreparable personal or financial harm. …

The expansion of claims made policy forms beyond “professions” caused the basic “claims made” concept to diverge and evolve into two distinct forms. One evolutionary branch commenced in professional liability coverages (known also as “errors and omissions” coverages in this series) and the second branch grew out of the financial services industry and the need for directors and officers liability protection, fiduciary liability and employment practices liability (referred throughout this series as “executive liability” coverages).

Although both branches attach to the tree at the same point; greatly different “claims made triggers” have resulted. Additionally, coverage terms, conditions and definitions differ between the two branches.”

The risks inherent in diminishing limit policies

“Diminishing limits policies create a host of potential problems for insurance company claim departments. As is well known the insurance industry has long been plagued with “nuisance” claims. While in some instances insurance companies make quick settlements of nuisance claims to avoid defense cost expenditures, in others, insurers will attempt to resist such claims to avoid setting a precedent, thereby sending a message to the plaintiff’s bar that nuisance claims will not be honored. Considering that defense costs are deducted from the policy’s aggregate limits, either course of action places an insurance company in a difficult position. … “

All should use greater care handling underwriting information

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