Our economy has suffered enormously during the past several months of shut down. As unemployment skyrockets and revenue streams dry up across industry sectors, many business owners are turning to their insurance policies seeking indemnification. Many are shocked and scared to realize that business interruption coverage is not triggered under their property policies due to the COVID-19 pandemic.
While we can’t necessarily predict the future, we do anticipate as the declinations keep rolling in and the trial lawyers pick up momentum, the lawsuits against our industry will increase significantly in numbers.
There’s no need to panic if you find yourself facing a claim. Remember, just because you are being sued doesn’t mean you’ve done anything wrong. Keep calm and understand the circumstances surrounding COVID is difficult at best and the entire industry is facing the same issue as your agency.
Some of you have never faced an allegation of improper action or omission and find yourself in unchartered waters. Don’t overreact. OIA in partnership with Chris Boggs at Big I outlined the recommended Do’s and Don’t’s to prepare our agents with the proper protocol to help your agency should you find yourself faced with an errors and omissions claim.
Do Not Do These Things
Do not, under any circumstances, alter the client’s file. What’s done is done. Making changes creates the appearance that there is something to hide. Accept what is there and prepare for what comes next.
Do not discuss the claim with anyone other than the claims representative, defense attorney or any other member of the office directly involved in the claim. The only individuals who need to be involved in any discussion related to any E&O claim are those personnel directly related to the care of the plaintiff’s account and those defending the agency.
Do not make any admission of liability or wrongdoing; and do not offer or make payment.
Do not provide any written or recorded statement to the plaintiff without your E&O carrier’s claim representative present.
Do not allow inspection, copying or removal of client files and records without consulting with your E&O claim representative.
Do not try to manage the claim on your own. The E&O carrier has more experience and is better able to manage the process. Allow those with more experience and resources to manage the suit.
The list of Do’s:
Notify the E&O carrier of a “claim” or potential claim immediately. Provisions in the E&O policy require the insured to notify the insurance carrier as soon as practicable following the receipt of a “claim” or any indication of a potential claim.
Listen for “trigger” words or questions. Some words, phrases or questions just don’t seem normal, in fact, they sound like something a lawyer would say. If your client uses terms like “duty,” “breach” or “breach of duty,” assume they have been talking with a lawyer. Also pay attention to the questions that are asked, does it seem like they are trying to trap you into admitting something? Notify the carrier of a potential claim if words or phrases seem to indicate a lawyer is already involved.
Assume every conversation is being recorded. Regardless of the legalities of recording a conversation, assume your answers are being recorded. Pick responses carefully.
Gather and organize all pertinent records related to the insured and the situation. But when doing this, remember the second “don’t” – don’t alter them. The claim representative needs all the information to conduct an investigation and prepare and provide a proper defense.
Write down all the information known about the incident surrounding the claim. Each member of the team directly related to the client and the incident giving rise to the E&O claim should record all they can remember about the incident or incidents on which the claim is based. This should be a factual narrative statement in chronological order. Leave out opinion and emotion. This is the time to act like you are talking with Joe Friday from Dragnet – just the facts. Who, what, when, where and why is all that should be contained in these accounts.
Assign one person as the claim leader. One person should be assigned the duty to report, track and manage all COVID-19 E&O claims within the agency.
Cooperate with the E&O carrier. This includes providing information and facts that look bad for the agency. Hiding or hedging certain aspects of the facts surrounding the situation on which the claim is based creates distrust between you and your insurer; it also makes the agency look guilty. The insurer is on your side.
Make sure you comply with all policy conditions and requirements. If the agency fails to comply with all E&O policy conditions, coverage may be jeopardized.
Remember, the alleged negligence has already happened, and you can make the situation far worse by overreacting and making uninformed decisions. Still have concerns or questions please reach out to me for additional guidance at 614-552-3048 or judy@ohioinsuranceagents.com. Furthermore, you have a complete team of E&O experts that are here to answer any questions or concerns that you may have. Reach out and we would be happy to discuss further.
