E&O Claim 3: A complaint was filed in court against an agent and two insurance companies. The policy in question was issued based on an application that was completed by the agent. The insured client died and the plaintiff contacted the life insurer to initiate a pay-out of benefits. According to the plaintiff, the life insurance company denied payment of benefits because the insured was treated for chronic kidney disease, and the insurer claimed this matter was not disclosed on the original application. The suit was submitted to E&O and that carrier appointed an attorney to defend the agent.
During the process of legal discovery, the agent’s lawyer learned that the agent completed a medical questionnaire in relation to the policy over the phone on a recorded line. The recording was used as evidence that the agent complied with all due diligence requirements. Subsequently, the agent was removed as a defendant in the case. Legal fees were covered by the agent’s E&O policy.
Costs to retain an attorney and be defended can become exorbitant. The protection provided by your E&O policy gives you peace of mind in knowing that you need not fear bearing those costs yourself. This is one of the many benefits provided to you by this important coverage.