P & c questions

[Josh]

The biggest think I see working in the favor of the agent here is the fact that the obligations to notify were on the carrier. How much would insurance companies love it if they got to stick all this junk on the agents? E&O would be astronomically expensive, but it isn't. Client didn't pay his bill for an extended period of time, carrier had the obligation to provide notice of cancellation/non-renewal. If the carrier didn't, it's the carriers problem. If the agent had given out a binder stating they had coverage and the carrier had non-renewed and said they wouldn't, that's a different story. If agent had continued taking payments and deposited them in a premium account so the client thought the insurance was taken care of because he was paying the bill, now the agent is in a much more uncomfortable position. I'm not seeing any of that though.

 

[BigIVU]

Most professional liability E&O policies are "claims made and reported." Aside from the requirement to report potential claims, if the agent fails to report and their E&O policy terminates, there may not be coverage for the claim.

Failure to timely report a potential claim to an E&O carrier could result in the claim being denied due to late notice. If an agent doesn't report a potential claim, s/he does so at his/her own peril.

The mere reporting of a claim to to the E&O carrier should not result in any underwriting action. Timely reporting the claim to the insurer will ensure that the claim has been reported within their policy period. It also allows the carrier to provide sound advice to the agent to make it far more likely that s/he will not be involved in litigation.

We have no details of what happened in the posted event. On the surface, it sounds like the agent did nothing wrong. I can see no downside in seeking the advice of the E&O claims/legal staff. On more than one occasion, I've seen agents release file information or speak "off the record" about a potential claim and their actions resulted in their inclusion in a lawsuit.

In many instances such as this, where the agent believes that nothing will ever come of the situation, the insurer will open the claim file, get the initial information, and then close the file with no action. The bottom line is that there should be no downside to reporting immediately, but failing to report it could have negative consequences.

 

[b61mack]

The big question is, did the client continue to pay his premium!! If he did, he will get the claim paid. If he did not pay his premium! Then he is blowing smoke............

 

[kongsmasher]

How does he usually pay his bill... monthly? Yearly? If its yearly, you might have a problem. If its monthly, he has no case.