How to Prepare for Your Errors & Omissions Insurance Renewal

October imageWhen it’s nearing your favorite time of year you’ll need to have a plan in place to be sure that your E&O Insurance is renewed in a timely manner.  You should set a pending in your calendar at least 30 days prior to the renewal date to be certain that you have received the proper information you need in order to renew.  You’ll want to be sure that you know who your E&O contact is.

Don’t be caught off-guard with having to pay the annual premium.  The premium expense can and should be part of your business’ budget plan.  Also, keep in mind that as the cost to defend E&O claims increases, at some point, you are likely to have an increase in your premium.  Allow for a cushion in your budget.

Before ordering your renewal coverage, ask any employees, as well as yourself, if there are any situations that might possibly result in a future E&O claim? If there are, report them. Has anyone expressed dissatisfaction with a product that you sold or the way a claim was handled?  Has anyone threatened to sue?   Regardless of whether you think their threat has any merit, you likely have an “Awareness Provision” in your E&O Insurance policy that states that if you become aware of any situation that may give rise to a future E&O claim, and if you report it to the insurer during the policy period that you first become aware of it, and provide the information outlined under that policy provision, should something develop in the future, the policy that the matter was reported under will respond.   Remember, the reason you have E&O Insurance is so that you can be defended.  The best defense is an early defense and that can only be rendered when you keep your insurer informed about any potential claims as well as actual claims.

Your companies and/or IMO’s are going to be requesting proof of continued Errors & Omissions Insurance. Failure to provide a current Certificate of Insurance could result in a delay in processing applications or releasing commissions.  Keep a record of which companies require proof of your continued E&O Insurance so that you know where you need to send a copy of your renewal Certificate.

You should educate yourself on how the E&O Insurance “claims-made and reported” policies work.  A policy must be in force at the time a claim is made against the insured (you) and reported immediately to the insurer.  Then, in order for the insurer to provide coverage on a covered claim that is resulting from a wrongful act, which occurred before the effective date of the current policy, you must have maintained, and be able to provide, proof of prior, continuous E&O Insurance.  This means there cannot be any gaps in coverage.  It also means that you must save your Certificate copies from year to year so that in the event of a claim, you can furnish the proof of prior, continuous coverage that you will be requested to supply.

If you do not make your E&O Insurance the priority that it should be, you risk having the current insurance expire, thereby creating a gap in coverage which results in the loss of the prior acts coverage that a continuous renewal would have provided.   And, you will have to provide your own defense on the declined claim.

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