History has shown that after major disasters, the insurance industry typically experiences a surge in agent/agency Errors & Omissions (E&O) claims. When there are many people involved in a crisis, judges tend to be more liberal in interpreting insurance policies and cases that are brought against insurance agents – thus increasing potential claim activity. This can lead to judges who are determined to find some type of coverage under an insurance policy or to uncover evidence that shows where the insurance agent may have breached his/her duty for standard of care by failing to offer or provide the appropriate coverage.
Managing the Risk
While it’s impossible for every broker to completely avoid pandemic-related E&O claims, there are ways to help mitigate the risk to better protect themselves and their agency. One of the simplest ways is to always be documenting. For example, an insured could argue in court that the broker never offered pandemic-related coverage to protect their business, failed to recommend a policy that didn’t have a specific virus exclusion, or even that the broker failed to file a claim in a timely manner. Documenting these and other pandemic-related coverage issues can provide a better line of defense against an E&O claim.
Another best practice to lessen this type of risk is to never delay or discourage a policyholder from filing a claim. Even if the broker doesn’t believe that a covered loss exists, it’s best for the broker to move forward with the process on behalf of the insured and not put himself or herself in the position of making coverage determinations.
Finally, the pandemic has solidified the fact that it’s critical for brokers to perform regular policy reviews with their clients. Not only is this the simplest way to uncover potential policy gaps, but also the best way to document whether the insured wishes to decline a specific coverage. In today’s hard insurance market, policy reviews are especially important as carriers are rapidly rewriting policies and making form changes that the insured may not be aware of come renewal time or when a claim occurs.
As we move into the fall and winter seasons, much of the country is bracing for the next wave of COVID-19 infections, and the insurance industry is bracing for even more potential E&O claims that could be directed at insurance professionals. Now’s the time for your clients to chart a proactive course of action to better mitigate their risk, one that includes the protection of an E&O policy.
At Worldwide Facilities, our expertise and wide market access to top-rated carriers makes it easy for you to secure an E&O insurance policy that best fits your clients’ needs. For more information, please contact Michele Epstein at firstname.lastname@example.org or 818-578-4042.