While most agencies certainly don’t expect to ever be faced with an E&O claim, unfortunately, they do happen. Currently, the number for some E&O carriers is one claim for every 16 agencies. This is an excellent result considering that 20 years ago, the number was probably one in seven.

Since you never know when that claim may happen, it is highly recommended that you factor in claims expertise when choosing your E&O carrier. An experienced E&O carrier recognizes that this is where the “rubber hits the road” and their objective is to handle the claim promptly and professionally.

An extremely important realization: just because you have been hit with an E&O claim does not mean that you/your agency did anything wrong. Some carriers are reporting that approximately two out of every three E&O claims are being closed for no loss payment. In many of these situations, the agency is absolved of any wrongdoing.

Should your agency be faced with an E&O claim, here are some helpful tips:

• Promptly report the claim. If you are not sure if the matter constitutes a claim, report it. Your E&O carrier is in the best position to make this determination.
   

• Do not alter or make changes to the file/records involving the claim/incident. At this point, the file will speak for itself. If it is determined that you altered the records to “help your case,” the defense of the agency could be significantly damaged.
   

• Do not allow the inspection, copying or removal of your records without consultation from your E&O carrier. Let the carrier guide you through the process.
   

• Do not provide written/recorded statements concerning the claim without the blessing of your E&O carrier.
   

• Do not discuss the matter with anyone other than your E&O carrier/the counsel they assign – keep the matter confidential!
   

• Do not make payments without the blessing of your E&O carrier. Good will payments do occur and while that may be the appropriate course of action, there have been a number of times where the agency gesture was viewed as an admission of liability. Contact your E&O carrier if you wish to make a good will payment. They will provide the guidance and counsel you need at a time like this.
   

• Do not make any admission of liability. The matter may get emotional and you may want the client to be “taken care of.” Turn the matter over to your E&O carrier and let them do their job. Actually, in some E&O policies an admission of liability by the agency could cause the E&O policy to be voided.
   

• Stay calm – this is extremely important. After all, E&O claims do happen and that is why you carry E&O. And remember, just because you are facing an E&O claim does not mean that you did anything wrong.