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E&O

From "13 Caveats in Using E&S Markets" to "27 E&O Procedural Mistakes" to "Agency Underwriting...Establishing a Minimum Limits Policy" to "The Danger of Not Reporting Claims" to "Documenting Coverage Reductions" to "How to Fire a Customer" to "What E&O Limits Do I Need?", this section of the VU research library provides you with the information and tools necessary to significantly reduce your E&O exposure.

"How Much Coverage Do I Need?"

Every professional agent knows to never answer the question, “How much liability coverage do I need?” But even if you don’t overtly answer the question, you may be leading or limiting your client’s choices. Don’t inadvertently make the limits choice for them, or limit the amount of coverage they can purchase.

Delivering Other-Than-Paper Copies of Policies

Are there any E&O or regulatory issues related to delivering policies on a thumb drive rather than the paper files? SwissRe VP and Sr. Underwriter Richard Lund addresses these issues.

DO NOT Sign Lender-Supplied Private Flood Insurance Forms

Banks are required to accept private flood insurance as broad as the NFIP policy per the Biggert-Water Flood Insurance Reform Act of 2012. The problem is, they want the AGENT to certify the flood policy meets the guidelines of the Act. No agent should ever certify something the banks are required to certify. This article explains why.

E&O Coverage for Non-Insurance Related Agency Services

E&O Risk: Agents, Carriers Urged to Review Web Copy

Lawyers can pull information off an internet archive, such as the Wayback Machine, which retrieves assertions agents have made to long-term clients on earlier versions of websites. When used well, a website is an effective consumer marketing tool. But have you thought about it also as an E&O risk?

Ending Follow-Ups with Late-Paying and Past-Due Customers

Your agency has finally concluded that following up on late-paying and past-due customers is too big an E&O exposure and too expensive and time consuming to continue. You believe it would be in order to contact all of your customers and advise that you are discontinuing this practice. What is your next step?

Flood Insurance: A New Opportunity?! (ISO Thinks So)

Floods occur virtually everywhere in our country, but each flood has unique characteristics. The common denominator of each of these events is: insureds are virtually unprotected from the effects and the costs associated with these events because most standard homeowners and business property insurance policies exclude damage caused by flood.

Getting Sued by Being Too Helpful: Stick to Your Expertise

Insurance agents have a deep desire to help their clients any way they can; but sometime, agents undertake to help in ways and areas where they are not qualified (or licensed). Don’t answer questions you are not qualified or legally able to answer just because you want to help. Being too helpful can get you sued.

Inadequate Replacement Cost – An Indirect Result of COVID

COVID-related supply chain issues have dramatically increased the cost of building materials. The result, replacement cost limits on property policies may be too low for the foreseeable future. How should an agency respond when talking with their clients about this issue?

Insurance-To-Value and Undervaluation

In 2013, Marshall & Swift/Boeckh reported that 60 percent of homes were underinsured by an average of 17 percent. In addition to increased construction costs many homes are not built to current building codes and that fact could result in significant out of pocket costs if the appropriate building ordinance and law coverage isn’t added. Let’s address these issues…

Legal Action Against the Insurance Carrier: What is the Agent’s Responsibility

ISO’s Commercial Property Conditions (CP 00 90) gives the insured up to two years to file suit against the insurance carrier. Should the agent advise their insured on this limitation? The answer might surprise you.

Read the Policy You’re Selling

This may be the most important coverage article you read this year. It may be the most important coverage article you’ve ever read. Please read it. And please have your colleagues read it. If you work in an agency, send a link to the article to your underwriters, marketing reps, and claims people. RTFA…Read The Article!

Smart Website Safety

A website or an app is not JUST a marketing tool; each really is a representation of what your agency is to the world (literally). Even “safe” wording and reasonable descriptions of the agency’s business model can be used against you in court if the “picture” painted on the site does not match the “reality” of your operation. What you say your agency does will be tested if a plaintiff alleges the agency’s work did not match that description.

The ‘Dumb’ Things We Do

Let’s face it, even the best and brightest of us sometimes do dumb things and often it’s with good intentions to help a customer. But the cold, hard E&O reality of undertaking non-insurance tasks for customers can be dangerous.

Value-Added Services Could Pose an E&O Exposure

Agencies often have to balance business decisions with their E&O implications. Value-added services can be extremely important to the prosperity of agencies. However, it’s important to consider the potential E&O exposures they present and adapt policies and procedures that take advantage of these strategic advantages while minimizing E&O potential.

27 E&O Procedural Mistakes

Ask an agency principal about internal procedures and he or she inevitably will tell you, 'Our procedures are proper; you won't find any discrepancies in our operations.' Following a third-party audit of those procedures, however, most agency principals are horrified to learn just how many procedural mistakes are being made in their offices every day. These mistakes can lead to E&O claims and substantially impair an agency's ability to defend against claims.

A Hint for the Wise

What a difference perspective makes! Hearing about an Error & Omission fiasco experienced by a fellow agent is one thing. Being personally called upon to sacrifice time and energy upon the altar of legal justice is quite another. Unfortunately, the close association with certain insureds often allows the contagious virus of 'it couldn't happen to me' to be transferred to the best of agents....

Advising Clients About the Availability of Insurance for Excluded Exposures

Your agency services an area subject to catastrophes. Is it the responsibility of your insureds to contact you if they want quotes/coverage for excluded perils (e.g., flood and earthquake) or are you responsible to contact each of them and offer the coverage?

Agency Web Site E&O Exposures

Agency websites have become a core component of the marketing strategy for many independent agencies, but they also may present errors and omissions exposures that must be managed. This article explores some of the major E&O exposures that may arise and provides several E&O tips for mitigating those risks, as well as sample website disclaimers.

Agent Disclosures of Known Hazards

If an agent is aware of a known hazard at an insured's business, is there an obligation to advise the insurance company? Does the agent or company have an obligation to advise the insured of what could be a life-threatening condition or major property loss exposure? Given the recent lawsuits arising out of the Warwick, RI nightclub fire, this could be a critical E&O question.

Agent Liability for Property Undervaluation

According to Marshall & Swift/Boeckh, two-thirds to three-quarters of buildings are underinsured by 25-40%. If an insured suffers an underinsured loss, whose fault is it? According to one recent court decision, in some cases, it could be the agent....

Are Insurance Agents "Professionals"?

Are insurance agents 'professionals'? Is an insurance agent considered as skilled in his or her discipline as a doctor, lawyer, architect, engineer, etc.? Professionals are held to a higher standard of care and how you hold yourself out to the general public can determine the nature and extent of your liability.

Can Agents Sign on Behalf of Insureds?

Question: 'We are wholesale agents. One of our retail agents has invoked the 'law of agency' as a rationale for submitting applications with his signature only, in lieu of the policyholder's. Our contention is that the broker is not a party to the insurance contract, hence any representations in an application signed only by the broker are irrelevant and would have no bearing in the event of a disputed claim or audit. What do you think?'

Coverage Checklists

An agency put together a list of 'disclaimers' they were considering having insureds sign and asked for input on the concept. The general consensus was that disclaimers are sometimes warranted but can't fully take the place of a good coverage checklist.

Do Agencies Need to Archive Policy Forms?

A recent issue of our IIABA 'Insurance News & Views' email newsletter included an abbreviated version of a VU article entitled 'Lost Policies…No Coverage?' The article included the statement that, “The agency, from both E&O and customer-service perspectives, should keep an archived copy of policies indefinitely.” As one of our IN&V readers asked, 'Why do agencies need to retain copies of policy forms when our insurers do that?'

Documenting Coverage Reductions

An agent asks, 'From an E&O standpoint, is documentation of a reduction in coverage, removal of drivers, etc. in our agency management system enough, or do we need to have signatures on file for every little change we make to a policy? These are other than the normal waivers/signatures required by each carrier.'

E&O and Checking Policies

An agent asks, 'With the advent of download from the carrier websites directly into our agency management system, do we need to check the renewal policy for accuracy? We are currently investing a lot of time and money into this process and rarely find that the company makes a mistake on the renewal policy.'

E&O and Clerical Errors

An insured accepts a premium quote and coverage is bound. Later, it's determined that a rating error occurred. The insurer then bills the insured for the corrected premium. Since the contract is in effect, can the insurer recover this money or must the carrier have to assume the loss? Below are some thoughts on this...send us yours!

E&O and Policy Changes

Making mid-term policy changes is a normal part of the insurance agency business. In fact, it is so routine that there is a danger of making ordinary, perfunctory policy changes without considering the potential E&O exposure. In particular, there is a big E&O risk when making policy changes based on information or instructions (or lack of information or instructions) from third parties.

E&O and Recording Phone Conversations

An agency's new phone system allows them to record incoming and outgoing conversations. The agency thinks this will be good for E&O and be better than relying on handwritten notes. What do you think? The agency also wants to know if they are obligated to advise the other party that the conversation is being recorded.

E&O and the CGL Policy

The line of insurance with proportionately the highest incidence of E&O claims is CGL coverage. This is probably not surprising given the broad use of this liability coverage, the complexity of exposures that it's used for, and the number of endorsements that can be overlooked. We polled the VU faculty to see if we could get some more specific examples of things to look out for in the CGL program that could lead to E&O claims.

E&O and the Hard Market

Errors and omissions are something we should all focus on all the time. However, in a hard market, E&O claims have a tendency to rise in both frequency and severity due to increased workloads, reduced coverages, and other factors. Below are some special considerations that merit increased attention in a hard market.

E&O Angles

We all know how important E&O loss control is within the agency. However, most agents don't attend a formal E&O loss control seminar more than once every couple of years, if that often. Now you can access valuable information about E&O loss control on a monthly basis beginning with our cataloging of over two years of E&O Angle articles from Independent Agent magazine.

E&O Caveat #1: Never Assume!

Having taught agent E&O seminars since 1988, one of the most common sources of E&O claims involves failure to communicate. In this article, we'll examine a serious breakdown in communications that involves a cardinal principle of E&O loss control...never assume!

E&O Exposures Involving Non-English Speaking Prospects

Our 'Ask an Expert' service has recently received additional questions involving E&O and procedural issues as more and more non-English speaking prospects enter the marketplace. While we cannot answer legal issues such as discriminatory practices, we can examine the E&O exposures and provide some guidance.

E&O Issues Dealing with Small Wholesalers

An agent asks, 'What is considered 'best practices' for entering into agency agreements with smaller wholesalers who have niche or specialty markets, many of whom are Internet based? Is it considered a good practice to verify that such a brokerage actually has the carrier appointment or program that it is claiming or request verification of the wholesaler's E&O coverage?'

E&O Loss Prevention Primer

With the series of disasters the past few years, from Western mudslides and wildfire toGulf Coast hurricanes to flooding in New England, we have seen an unprecedented increase in the opportunity for potentially catastrophic E&O claims against agencies by insureds with inadequate coverage. Every now and then, it helps to get back to the basics.

E&O Procedural Audits

Most agents have attended at least one E&O seminar, and probably a lot more than that. Aside from the E&O premium discount, did you get any other benefit from the seminar? Most important, did you go back to the agency and implement any of the ideas presented during the seminar? According to one expert, their analysts have found when auditing agencies that too few actually implement sound E&O loss control techniques. Here are the results of their study....

E&O Security in the 24/7 Agency (Part 1 of 8)

As the internet continues to play a bigger role in agency and company marketing and service, there is an increasing expectation by insureds of 24/7 service, particularly in the area of claims. Expect this to intensify as email and web site interaction become more and more frequent. In this article, Virginia Bates explores the E&O exposures created by new and old technology and what you can do about them.

E&O Security in the 24/7 Agency (Part 2 of 8)

As the internet continues to play a bigger role in agency and company marketing and service, there is an increasing expectation by insureds of 24/7 service, particularly in the area of claims. Expect this to intensify as email and web site interaction become more and more frequent. In this article, Virginia Bates explores the E&O exposures created by new and old technology and what you can do about them.

E&O Security in the 24/7 Agency (Part 3 of 8)

As the internet continues to play a bigger role in agency and company marketing and service, there is an increasing expectation by insureds of 24/7 service, particularly in the area of claims. Expect this to intensify as email and web site interaction become more and more frequent. In this article, Virginia Bates explores the E&O exposures created by new and old technology and what you can do about them.

E&O Security in the 24/7 Agency (Part 4 of 8)

As the internet continues to play a bigger role in agency and company marketing and service, there is an increasing expectation by insureds of 24/7 service, particularly in the area of claims. Expect this to intensify as email and web site interaction become more and more frequent. In this article, Virginia Bates explores the E&O exposures created by new and old technology and what you can do about them.

E&O Security in the 24/7 Agency (Part 5 of 8)

As the internet continues to play a bigger role in agency and company marketing and service, there is an increasing expectation by insureds of 24/7 service, particularly in the area of claims. Expect this to intensify as email and web site interaction become more and more frequent. In this article, Virginia Bates explores the E&O exposures created by new and old technology and what you can do about them.

E&O Security in the 24/7 Agency (Part 6 of 8)

As the internet continues to play a bigger role in agency and company marketing and service, there is an increasing expectation by insureds of 24/7 service, particularly in the area of claims. Expect this to intensify as email and web site interaction become more and more frequent. In this article, Virginia Bates explores the E&O exposures created by new and old technology and what you can do about them.

E&O Security in the 24/7 Agency (Part 7 of 8)

As the internet continues to play a bigger role in agency and company marketing and service, there is an increasing expectation by insureds of 24/7 service, particularly in the area of claims. Expect this to intensify as email and web site interaction become more and more frequent. In this article, Virginia Bates explores the E&O exposures created by new and old technology and what you can do about them.

E&O Security in the 24/7 Agency (Part 8 of 8)

As the internet continues to play a bigger role in agency and company marketing and service, there is an increasing expectation by insureds of 24/7 service, particularly in the area of claims. Expect this to intensify as email and web site interaction become more and more frequent. In this article, Virginia Bates explores the E&O exposures created by new and old technology and what you can do about them.

How to Fire a Customer

A decision agency owners or managers sometimes face is how to 'fire' a customer. Some customers frankly are more trouble than they're worth. Some demand too much service in relation to the premium paid, some are antagonistic or abusive to staff, others just aren't a good 'fit' with the agency. So, who do you nonrenew these customers legally and ethically?

Increasing Policy Limits Without Permission

An agent inquires: 'We are going to be updating our auto clients in a new program to $500K if there has been no increase or a decrease in premium. We will then let them know that we have increased their limits. They can call us if they don’t want the increase. We will also give them other options to add. Can we increase their limits and then tell them we did it or do we have to have their permission first?'

Managing Commercial Lines E&O Exposures (Part 1 of 3)

This article provides an overview of various E&O loss exposures that exist in commercial lines of insurance and reviews methods and procedures that an agency could consider to help reduce the possibility of a claim. Included is information about certificates of insurance, additional insureds, hold harmless agreements, subrogation waivers, protective safeguards warranties, leased property exposures, and more.

Managing Commercial Lines E&O Exposures (Part 2 of 3)

This article provides an overview of various E&O loss exposures that exist in commercial lines of insurance and reviews methods and procedures that an agency could consider to help reduce the possibility of a claim. Included is information about certificates of insurance, additional insureds, hold harmless agreements, subrogation waivers, protective safeguards warranties, leased property exposures, and more.

Managing Commercial Lines E&O Exposures (Part 3 of 3)

This article provides an overview of various E&O loss exposures that exist in commercial lines of insurance and reviews methods and procedures that an agency could consider to help reduce the possibility of a claim. Included is information about certificates of insurance, additional insureds, hold harmless agreements, subrogation waivers, protective safeguards warranties, leased property exposures, and more.

Policy Changes Requested by Third Parties

From time to time, agents may be asked to make policy changes at the request of someone other than a named insured. Most often this involves calls from auto dealerships trying to make it easy on a customer. If you get such a call, what should you do?

Should Agents Send Certificates to Insurers?

An insurer recently sent its agency force a 'Good News!' bulletin advising that it was no longer necessary to send it copies of most certificates of insurance. The bulletin also pointed out that it was the responsibility of the agent to notify the certificate holder of cancellation. What should agencies do when told by a carrier not to send copies of certificates?

Should Producers and CSRs Pay for E&O Claims?

An agency recently was hit by a $38,000 claim under an E&O policy with a $25,000 deductible. Now the agency owners want the deductible to be paid by the producer, CSR, office manager, and agency president. Should allegedly negligent employees be required to pay for E&O claims or policy deductibles?

Signature Stamps

One agency owner had a stamp made of the other agency owner's signature and gave it to the agency's CSRs to use when processing documents in order to save the other partner time. The other partner is not comfortable with this and wonders if it's even legal.

The Role of Agency Procedures in E&O Loss Control

An insured has a loss that exceeds her policy limits. She claims that, a short time ago, she had called and increased her limits. The agency has no record of such a call. The adjuster has suggested that she recover the remainder of the claim from the agency's E&O policy. Without documentation, how does the agency defend itself? Answer: a written agency procedures manual that incorporates the 'invariable practice' principle.

Top 3 Ways to Minimize E&O Claims

Recently our faculty was asked to identify the Top 3 ways to minimize E&O claims. In this article, we'll provide their responses, along with an article from our E&O carrier on how the hard market affects agents' exposure to E&O claims and how they can mitigate this exposure.

Voluntary E&O Payments

When a small, uncovered first-party loss is less than an agency’s E&O deductible, there is a temptation to pay the claim directly out of the agency’s own funds, without ever notifying the agency’s E&O carrier. This practice, while expedient, is extremely dangerous. Here’s how it came back to haunt an agency....

What E&O Limits Do I Need?

In determining the limits an independent insurance agency should carry in an E&O/excess liability policy, what factors should be considered? Is it a matter of how much the agency can afford, how large an error or omission could be made, the size of the accounts at risk, etc.?

What Have You Done to Protect Your Agency?

Agents have many opportunities to prepare their agencies against the rising risk of a lawsuit, but three critical areas are too often over-looked: 1) determining your professional status, 2) improving your use of technology, and 3) instituting the use of coverage checklists.

What Is the Point of Following Good Procedures?

For many procedural changes, the risk and reward are easily measured. For example, a simple disclaimer on proposals or emails has a price of $0 so why not do it? A more complex change such as mandated coverage checklists has a price. But is it worth it?