E&O Weekly Prevention
Strategies for the Professional Agent
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June 21, 2012


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Letter from the Editor
This Week's Edition of AOA E&O Prevention

Table of Contents 

Obama Care: Risky Business

By Kim Piersol, FCAS, MAAA of Huggins Actuarial Services, Inc.


Ninth Circuit Upholds Denial of Coverage Under E&O Policy As Insured Had Notice of the Claim Well Before the Policy's 30 Day Provision.

By Michaela L. Sozio, Esq. of Tressler LLP 


Don't Bother Trying to Fix It, We'll Just File Suit! 

By Patrick Reilly, Esq. of Marshall, Dennehey, Warner, Coleman & Goggin


New York Court Clarifies Liability Threshold for Mold Infestation

By Michael Zigelman, Esq. and Kirsten Ennis, Esq.of Kaufman Dolowich Voluck & Gonzo LLP

We also would like to extend an invitation for you to join AOA's LinkedIn 

group at AGENTS OF AMERICA. Also our affiliated Insurance Open Network, a LinkedIn open networking group for all insurance professionals.


AgentsofAmerica.ORG has partnered with WebCE, a leading nationwide provider of Continuing Education for insurance professionals, to provide you with state-approved self-study CE courses to satisfy your CE requirements online! Check out your CE State Requirements.


Also available is our most recent edition of "AOA Tips, Views, News & More," including our new feature "Insurance Resources."  Remember to tell your friends and business associates that membership in AgentsofAmerica.ORG is FREE! Also if you have any thoughts, comments or suggestions, please email me at info@agentsofamerica.org


"Bringing the Best Together"


Brit Weimer



AOA News, Views, Tips & More


Financial Tip of the Month 

By Mike Brady of the Brady Financial Group, LLC.   


Prior to starting due diligence in a buy/sell agency transaction make sure you execute a Letter of Intent (LOI). This is the most effective way of allowing both sides (buyer and seller) to share the confidential information necessary when evaluating a transaction. The letter of intent is typically a non-binding document outlining the terms of the proposed deal. This document is put together after initial meetings have led both parties to believe more serious discussions should take place. The LOI usually addresses items such as; purchase price and terms of payment (down payment and earn out), stock or asset transaction, how assets/liabilities of the acquired agency will be handled, future compensation, transaction financing, confidentiality clause, exclusive right to negotiate clause, due diligence provision, reps and warranties and expected timeline for closing. After the LOI has been signed off by both parties you should make plans to begin the due diligence process and determine who will handle this for you.


Contact Mike at mike@bradygrp.com or Visit Brady Financial Group(484) 653-6280




Insurance Coverage Tip

By Kristin Toto of Martin & Company



Costly Abuse & Molestation Defense Costs Bring New Coverage Options


Social Service Organizations face increased exposure to Abuse & Molestation claims as they often provide care to at-risk individuals such as children, the elderly and handicapped individuals. It is crucial that these service organizations, and those alike, have insurance coverage; however, the means necessary to successfully defend abuse or molestation claims often require the need to hire experts and specialized legal counsel which can be very costly and may go beyond the basic coverage limits.


Great American Insurance Group responded to this need in the marketplace and recently launched a new Abuse or Molestation Coverage Option that broadens the definition of "Abuse" to include any actual, threatened or alleged act that encompasses both sexual and non-sexual behavior. This new coverage provides claim and legal defense expense outside the limits of insurance. Abuse or Molestation Limits of Liability are available up to $1,000,000/$3,000,000 and are independent of the Professional Liability and General Liability Coverage Parts.


To view more "hot trends" in the Property & Casualty Insurance Marketplace, visit:


Martin & Company's Market Trends & Updates



What additional services would you like to see from your E&O carrier? 
Analysis and comparison of E&O between peer firms 
Loss control, training & risk management 
Nothing, just give me a low price. 
article1Obama Care: Risky Business
By Kim Piersol, FCAS, MAAA of Huggins Actuarial Services, Inc.
Systemic Risk is defined as "risk to an entire system or sector" which spills over into, and has a significant effect on the general economy.  The underwriting cycle in property and casualty insurance is an example of systemic risk. The insurance industry is not a generator of systemic risk. Insurers, particularly writers of Medical Professional Liability insurance ("MPL"), are vulnerable as recipients of systemic risk.










article2Ninth Circuit Upholds Denial of Coverage Under E&O Policy As Insured
Had Notice of the Claim Well Before the Policy's 30 Day Provision
By Michaela L. Sozio, Esq. of Tressler LLP


The court held that the insured realty company was not entitled to coverage for claims that were reported to its E&O carrier during the policy period, but were noticed to the insured earlier than - and thus outside of - the policy's 30-day notice requirement. In Re/Max Mega Group v. Maxum Indemnity Co., Case No. 11-55142 (9th Cir. March 12, 2012).







Firebrand Social Media   





article3Don't Bother Trying to Fix It, We'll Just File Suit!  
By Patrick Reilly, Esq. of Marshall, Dennehey, Warner, Coleman & Goggin 

  Key Points:
* In Pennsylvania, all claims alleging breach of warranty with respect to movable "goods" are covered by Article 2 of the Uniform Commercial Code.
* Claims for violation of the Magnuson-Moss Warranty Improvement Act and the Pennsylvania Unfair Trade Practices and Consumer Protection Law must typically still comply with the requirements of the Uniform Commercial Code prior to filing.



articlefourNew York Court Clarifies Liability Threshold for Mold Infestation
By  Michael Zigelman, Esq. and Kirsten Ennis, Esq.of Kaufman Dolowich Voluck & Gonzo LLP 
Although New York City real estate landlords and co-op and condo board members typically do not inhabit the properties they own and manage, a recent First Department decision gives them reason to fear the impact of mold infestation. After a 2009 New York Supreme Court decision holding that there is a lack of scientific evidence to support a finding that mold exposure can cause injury, landlords and board members were able to breathe easy. Now, however, the First Department has reversed this holding, thereby affirming the potential for liability as a result of mold infestation in New York City apartments. Cornell v. 360 W. 51st St. Realty, LLC, Nos. 113104/04, 4810, 2012 N.Y. App. Div. LEXIS 1614 (N.Y. App. Div. 1st Dep't Mar. 6, 2012).  

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