E&O Prevention
Strategies for the Professional Agent
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September 29, 2011


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"Insurance Agents & Brokers Risk Management Program"






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Letter from the Editor

I am happy to announce that we created an Advisory Board to work with James Wm. Kallman, Ph.D., ARM, RD, who has agreed to be our editor-in-chief with respects to our up and coming Risk Management eBook, "E&O Loss Control & Risk Management Program for Insurance Agents and Broker." 


Check out our updated "MEET THE AUTHORS"  to our new EBook for more detaits.  The Book, once completed, will have 26 distinct chapters plus an Appendix on Best Practices that will represent a collaborative effort of 25 of the top E&O insurance attorneys and experts from across the country. Joining Dr. Kallman on this project will be myself and Dr. Andrew Whitman. The primary responsibility of the Advisory Board will be  would be to help identify new topics as well as additional authors, anyone interested part of this project should contact me.  


As we announce last month, we have another new resource for our readers. Each month, we will feature a brand new Social Media EBook that contains valuable information on how you can harness the power of social media. Each featured EBook will contain a wealth of information that will include such topics as Facebook, LinkedIn, Twitter, Email and Blogging to name a few. This month's EBook is entitled "57 Email List Building Tips", We know you'll find this information valuable for your business. Please feel free to email us to share your comments. In addition, we are happy to consider suggestions or topics you'd like us to put into an EBook"


This month's poll question:


How many years of P&C Agency experience do you want from your E&O Insurance Carrier?


1. Does not matter as long as price and coverage is      good

2. 1-5 years experience

3. 6-10  years experience

4. 11+ years of experience


Again, we want to thank everyone for their support.  Remember to tell your friends and business associates that AgentsofAmerica.ORG is now offering FREE MEMBERSHIP.


Also, available for our readers, AgentsofAmerica.ORG is now offering a new service to all of our subscribers and readers to market their products, services or upcoming events, MARKET SOLUTIONS.


This unique opportunity will allow you to reach thousands of Insurance Agents, Brokers and Insurance Professionals across the country in timely, efficient and cost effective manner. In addition to sending out your message, we can also help you use Internet Marketing as medium to convey your announcement, as well as on how it can be utilized to effectively grow your business. If you have any question, please send your inquiries to: info@agentsofamerica.org .


"Bringing The Best Together" 

Brit Weimer, Esq.


Table of Contents
By Russ Vignali, Esq. 

By Christopher J. Conrad, Esq.

Court Holds That Manifestation Trigger Is Date That Property Damage Became Discoverable

By Eric A. Hiller, Esq. 

tipstoTips to Avoid E&O Claims

By Paul R. Fowkes, Esq. and Ryan C. Hasanbasic, Esq.


It happens more than you would like to think, reputable insurance agencies unknowingly engaging in misguided practices, resulting in unnecessary and costly litigation. The number of Errors & Omissions ("E&O") claims and the resulting costs associated with E&O litigation may be reduced if agencies develop sound practices and policies to avoid such claims. The following tips should assist insurance agents in avoiding E&O exposure. 



eE&O Loss Prevention

By Brown & Brown of California, Inc.



Allegations against the agent:


The agent was requested to bind a homeowner's risk on a property located in a heavily wooded area. The agent failed to inspect the risk prior to binding the policy. When underwriting received the application and information on the risk, they performed their own inspection and determined that the risk was ineligible due to the fact that risk was located in a National Forest. The agent did not have authority to bind a risk located in a National Forest without underwriting approval. The carrier attempted to get off the risk, but a fire destroyed the home prior to the cancellation date. The carrier was forced to pay for the loss and sought reimbursement against the agent for exceeding his binding authority.



theThe "Oops" Factor of Risk Management

By Charles T. Wilson, CMC, CRM, RPLU


Contingency planning might be the most important element of risk management. Director magazine several years ago reported that 80% of firms that suffer a major setback to revenue do not survive - unless they have a contingency plan.






freedoesnotFree Does Not Have Value 

By Mark Hunter


If something is free - or worse, available in unlimited quantities - how could it have any real value?


My problem with "free" is it's what far too many salespeople and marketing teams are using as a way to try to create loyal customers.  Ask yourself, "How loyal are you going to be to something that's free?"




nlrbNLRB Makes "Concerted" Effort to Protect Employees' Facebook, Twitter Posts

By Dianna D. McCarthy, Esq.


The Office of the General Counsel for the National Labor Relations Board ("NLRB") has released a Report ("Report") detailing the results of 14 recent social media cases, which provide clarification and guidance regarding the lawful scope of employers' social media policies and the type of social media communication by employees which receives the protection of Section 7 of the National Labor Relations Act.






aA Law Firm's Disbursement Of Funds From A Client Trust Account was A "Professional Service."

By Dana Sheridan, Esq.


In Nardella Chong, P.A. v. Medmarc Casualty Ins. Co., 2011 U.S. App. LEXIS 10685; 22 Fla. L. Weekly Fed. C 2109, the Plaintiff law firm filed a declaratory relief action against its insurer, Medmarc Casualty Insurance Co. ("Medmarc"), seeking to determine whether the professional liability policy at issue provided coverage for attorney Chong's erroneous disbursement of client funds from its trust account. The District Court granted Medmarc's motion for summary judgment denying coverage and appeal to the 11th Circuit followed. The 11th Circuit reversed the summary judgment ruling and applying Florida law, held in favor of the law firm, holding that the firm's disbursement of funds was a "professional service" under the Medmarc policy.


Read More... 



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defendingDefending an "Inherently Dangerous Product" Has Become More Difficult in New York

By Russ Vignali, Esq. 

Florida state courts (see Aubuchon Homes, Inc. v. Great American Ins. Co., Case No. 04-CA-004430, 20th Judicial Circuit, Lee County, Florida) have begun following Keenan Hopkins Schmidt & Stowell Contractors, Inc. v. Continental Cas. Co., 653 F. Supp. 2d 1255 (M.D. Fla.), a 2009 federal case standing for the proposition that when an insurer denies a claim under late notice it cannot prove prejudice as a matter of law if it is able to investigate a claim sufficiently to permit it to deny the claim on other grounds. The Keenan Hopkins court held that the ability to investigate the claim effectively rebuts any presumption of prejudice arising from the late notice. 





thirdThird Circuit Holds That Private Employers Are Not Prohibited By The Bankruptcy Code From Denying Employment To Individuals Who Previously Filed For Bankruptcy

By Christopher J. Conrad, Esq.




  A private employer is not prohibited under 525(b) of the Bankruptcy Code from refusing to hire an individual simply because he or she previously filed for bankruptcy.

  Public entity employers, however, are prohibited by 525(a) of the Bankruptcy Code from denying employment to an individual because he or she previously filed for bankruptcy.

  Public entity employers should not make inquiry as part of a prospective employee's application or interview process of whether he or she previously filed for bankruptcy, as even making the inquiry may be considered discriminatory and in violation of 525(a) of the Bankruptcy Code. 




courtCourt Holds That Manifestation Trigger Is Date That Property Damage Became Discoverable 

By Eric A. Hiller, Esq. 


Four trigger-of-coverage theories are generally applied by courts in determining whether coverage exists under a CGL policy: (1) exposure; (2) manifestation; (3) continuous trigger; and (4) injury-in-fact. For many years, federal district courts in Florida were opposed to an injury-in-fact trigger. In perfunctory fashion, all of them applied the manifestation trigger, which is a simple, bright-line test. However, in three recent opinions issued by federal district courts in Florida, including Mid-Continent Cas. Co. v. Siena Home Corp., 2011 WL 2784200 (M.D. Fla. July 8, 2011), the courts held that the insuring agreement is triggered when the damage becomes discoverable not when it is actually discovered. This essentially means injury-in-fact even though the courts continue to call it manifestation. 

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