Loss Control topics tend to advise on what an agent should be doing in order to avoid a claim. This blog focuses on five definite ways an agent can increase the potential for an errors & omissions claim being made against them.
1. Only advise your clients (and potential clients) what is covered under their policy—they don’t need to know what their policy excludes. Research has shown that clients and potential clients are more interested in what is not covered by their policy than what is. A good practice is to provide specimen policies and riders with proposals. This will help clients and potential clients have a better understanding of their policy benefits. This will also allow the client (or potential client) to identify any concerns. By furnishing this information, clients and potential clients may ask you to sell them additional protection.
Claims Made and Reported Policy Form
Experience has demonstrated there is a lot of confusion on the part of many producers and agents concerning the operation of their Claims Made and Reported Errors and Omissions coverage. This confusion can be costly, and can allow the agent to become a victim of one or more potential pitfalls. We hope the following information will be helpful.
Following are some key terms you should know:
“Occurrence” — An event or chain of events that ultimately causes a claim. Example: The sale of a disability income policy
“Claim” — An actual demand for damages (money). Most of the time, evidenced by a lawsuit, although it can be as simple as a letter from the alleged injured party or their attorney requesting reimbursement.
“Incident” — Any statement, action or AWARENESS of a situation that could be perceived as having a potential for an E&O claim being presented in the future. This could be in the form of a statement made by a client during a phone conversation, a client’s letter, or your just feeling uncomfortable about a situation.
“Prior Act” — An occurrence before the effective date of current E&O coverage. Following is a scenario showing how the Claims Made E&O coverage works: