Common concerns expressed by many in regards to insurance agency E&O risks include: inadequate coverage; failure to issue certificates; failure to process changes; failure to offer options; and misrepresentation of services or claims. With so many areas of vulnerability how can you afford to go without errors and omissions liability insurance?
The answer is that you cannot. Unfortunately, your customers may not take total responsibility and accountability for their buying decisions, and if they have a claim that is not covered then they are likely to sue you. Potentially, you didn’t do anything wrong, but you could still be sued. There is always the chance that an unscrupulous individual will claim that an E&O incident arose from a blatant dishonest act and you misguided them intentionally, regardless of the facts of the matter.
Turning a negative into a positive
Moving forward, you can possibly turn an E&O experience into an advantage. Having faced an E&O claim where you didn’t do anything wrong but learned something from the experience might make you better prepared to avoid such situations in the future. The fact is that when everything runs smoothly there is less concern about lawsuits and claims of negligence. Once the matter has to be dealt with, it changes ones perspective about the exposures that exist on a day-to-day basis.
Cost cutting is trending due to the economic climate
Just as agencies are looking to cut expenses in today’s economy, the same goes for their customers. As customers seek to reduce their premiums, and agents look for new carriers to lower those premiums, there is the potential for coverage differences and gaps that could in turn lead to an E&O exposure.
Therefore, whenever a customer looks to reduce their coverage, whether they are dropping coverage, or reducing the limits, you should be taking some action to make sure you get those requests in writing, otherwise you could be accused of failure to notify them of those differences. This is a prime example of why you need to secure errors and omissions liability insurance coverage.