| Summer 2020 MAGAZINE ARTICLE DO’S AND DON’TS OF COVID-19 E&O LAWSUITS By: Chris Boggs
COVID-19 has changed the agent’s errors and omissions (E&O) landscape for the next several months. While we can’t predict the number of agents who may have E&O claims at this point, the odds are high that if you don’t get sued, an agent you know will. Proper actions and reactions when threatened or served with an E&O suit arising out of this pan- demic are of utmost importance. Once a threat is made, a lawsuit is filed, or the alleged improper act or omission has already occurred, don’t worsen the situation by making bad decisions. Remember these “dos” and “don’ts” if you find yourself in an E&O situation. Let’s start with the first MAJOR don’t: Do not overreact to the claim. Understand that there is no shame in being accused of an error or omission, especially given the unusual circumstances of COVID-19. Even the best practices and procedures may not protect your agency right now. Anger, either toward yourself or others, is counterproductive and serves only to increase the weight of the situation. Do notDo not, under any circumstances, alter the cli- ent’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 an E&O claim are those personnel directly related to the care of the plaintiff’s account and those defend- ing the agency. Do not make any admission of liability or wrong- doing, and do not offer or make payment. Do not provide any written or recorded state- ment to the plaintiff without your E&O carrier’s claim representative present. Do not allow inspecting, copying or removing 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 handle the process. Allow those with more experience and resources to manage the suit. Do
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 carri- er immediately 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 do not seem normal. It sounds like something a lawyer would say. If your client uses terms like “duty,” “breach” or “breach of duty,” assume they have beentalking with a lawyer. Also, pay attention to the questions they ask. 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 associated with recording a conversation, assume your answers are being recorded. Pick responses carefully. Gather and organize all pertinent records relat- ed to the insured and the situation. However, remember the second “don’t” - don’t alter them. The claim representative needs all the informa- tion to conduct an investigation and prepare and provide a proper defense. Write down all the information known about the incident surrounding the claim. Each mem- ber of the team directly related to the client and the event 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 information should be a factual narrative state- ment in chronological order. Leave out opin- ions and emotions. You should act like you are speaking with Joe Friday from Dragnet – just the facts. You should only include who, what, where, when and why in these accounts. Assign one person as the claim leader. One per- son 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. Cooperation includes providing information and facts that look bad for the agency. Hiding or hedging cer- tain aspects of the facts surrounding the situa- tion on which the claim is based creates distrustbetween 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. Chris Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS, is a veteran insurance educator. He is Executive Director, Big I Virtual University of the Independent Insurance Agents and Brokers of America. He can be reached at chris.boggs@iiaba. net.
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