While laws regarding duties of insurance agents and brokers vary from jurisdiction to jurisdiction, it is important to realize that if a claim is reported to them, the agent or broker may be viewed as having a duty or having assumed a duty to report the claim to all potentially applicable insurers, including, in some instances, all layers of insurance. It also may be time to report a notice of circumstances or a claim under the insurance agency’s own E&O policy-and the prudent insurance agent or broker would be wise to consult the E&O’s policy on reporting terms, an E&O attorney, or E&O claims representative for guidance. The prudent insurance agent or broker will want to get an experienced E&O attorney involved to help prepare and defend the agency’s interests at the non-party deposition, which will result in the expenditure of the agency’s time and resources, as well as an unwanted business headache. Even if an E&O action is not immediately started against the insurance agency, someone from the agency may be subpoenaed to testify as a non-party witness in a declaratory judgment action brought by or against the insurer with respect to the underlying claim. A late notice denial could easily negatively impact business relationships with the insured and/or the insurer. Regardless of the law of the particular jurisdiction, an agent or broker embroiled in a late notice denial has already, in effect, lost. Further, property policies generally require that the insured promptly report the loss within a reasonable time, so that the insurer can investigate and appropriately evaluate the claim. The law-with respect to late notice, includes whether and when a carrier has to show they were prejudiced by the untimely notice, and what may count as a reasonable excuse by the insured for the delay-varies from jurisdiction to jurisdiction. Timely notice provisions are often considered conditions precedent to coverage and, if not complied with, can generate a late notice defense by the insurer causing the insured to potentially lose coverage. The purpose of timely provisions is to allow the insurer to investigate as early as possible, and to defend or settle the claim. Most liability policies (both claims-made and occurrence-based policies) have timely notice provisions requiring the insured to provide notice of the claim to the insurer immediately, as soon as reasonably possible, or as soon as reasonably practicable. Common examples include commercial general liability policies, homeowners, and auto insurance. Failure to report the claim within the requisite reporting period will void the claim.Īn occurrence-based policy affords coverage for a loss that occurred during the policy period, regardless of when the claim was made against the insured. The more prevalent “claims made and reported form” requires the claim and reporting of the claim to the insurer both take place during the same policy term or the ERP. A pure claims-made form requires claims to be reported “as soon as practicable” or promptly, which does not necessarily have to be during the policy term. A claims-made form affords coverage for “claims” first made during the policy period or the extended reporting period (ERP), regardless of when the occurrence took place. Many types of professional liability insurance can be written on a claims-made form, most notably directors and offices (D&O) and employment practices liability (EPL) policies. If not handled appropriately and in a timely fashion, the reporting of an insured’s claim can quickly turn into an errors and omissions insurance (E&O) claim for the insurance agency.ĭelays in reporting claims have resulted in E&O lawsuits against insurance agents and brokers have arisen under both claims made and occurrence policies. What may be a difficult time for the insured can be made more difficult if the insurance agent or broker does not appropriately handle the reporting of the incident, accident, occurrence, circumstance, or claim. Once a loss has been incurred, they often turn to their insurance agent or broker to assist in the claims submission process. Insureds buy insurance to have protection should a claim occur. This article originally appeared in Goldberg Segalla’s Professional Liability Matters.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |