E&O Weekly Prevention
Strategies for the Professional Agent
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September 13, 2012


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Letter from the Editor


This week's edition of AOA E&O Prevention:  


Table of Contents    


Still Crazy After All These Years: Lateral Moves and Non-Compete Agreements 

By Jonathan S. Ziss, Esq.

Homeowners' Insurance Does Not Cover Claims of Negligent Entrustment of a Motor Vehicle Says a Connecticut Appellate Court 

By Stephen P. Brown, Esq., Carl J. Pernicone, Esq. & Samuel I. Reich , Esq.

Contract Liability Exclusion Precludes D&O Coverage for Tort Claims 

By Kathryn A. Formeller, Esq.

N. J. Law Applies to the Question of the Allocation of Coverage Among Excess Insurance Policies 

By Thomas Paschos, Esq

Check out this week's edition of World Risk & Insurance News at WRIN.tv, Also available this week is our new feature, "Recommended Reading" where we will suggest books, articles and interesting topics written by one of our "Experts", today we feature, attorney Peter Biging, he has written a chapter, "Defending the Professional Liability Claim Involving Allegations of Fraud or Other Intentional Malfeasance" and it is now available at Amazon.com.   


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 and More



Britton D. Weimer. Esq. of Jones Satre & Weimer PLLC


The top 8 rules of EPL discrimination claims prevention.
Rule number one: "Make employment decisions based upon an applicant's or employee's qualifications under the written job description."


Rationale: The at-will doctrine protects employment job decisions made based upon genuine business considerations. However, the law prohibits employment job decisions made based upon an employee or applicant's membership in a legally-protected group such as race, gender, age or disability. 


Virtually all employment-practices claims have a plaintiff who is a member of a legally-protected group. So the core issue is almost always the same: was the employer's decision made based upon the plaintiff's membership status, or based upon a genuine business need.


The best defense against such claims is documentation. Specifically, the employer wants to have a written job description, and to show from that job description that the employee or applicant did not meet the practical requirements of the job. If proven, the plaintiff's membership in the protected class is irrelevant.


Source: Weimer, Employment Practices Liability, Chapter 6 (2nd ed. National Underwriter 2012).

Contact Brit 952/820-8403 or bweimer@jonessatre.com  



E&O Loss Prevention Tip  

Description of Claim:


Classification of employees - Employee vs. Independent Contractors

Allegations against the Agent:  The agent wrote a business owners policy (BOP) on the claimant's beauty supply store location approximately 20 years ago.  The agent also handled all of the claimant's personal lines policies such as auto and homeowners coverage.  Five years after the first location opened, the claimant opened a second location.  This location was added to the current BOP.  In late 2009, the claimant lost their lease at the first location and moved all of their stock to the second location.  The agent knew of this move but he never asked if the claimant needed to increase their policy limits.  The increase in business personal property amounted to $77,000.


The underlying loss:  A fire occurred to the building, which contained the claimant's business in April 2005.


Damages:  The claimant's business was a total loss and the damages suffered were $550,000. After all of years of being their insurance agent, the claimant relied on him to be their advisor on what was adequate coverage for all of the policies.    


Risk Management Tip:  Create a check list or a procedure when a client makes a change to a policy.  This will ensure that the right questions are asked to the insured.

Brought to you by:


CalSurance Associates - A Division of Brown & Brown Program Insurance Services, Inc.   info@calsurance.com  or (800) 745-7189


Results of Last Week's Poll Question    


Does your agency have a written procedure on how to handle claims, lawsuits sent to you by your clients/insured's


Yes  80%

No    20%

This Week's Poll Question


Effective use of an Exposure Analysis Checklists is widely regarded as a key component in an agency's E&O loss prevention program. Please note whether you utilize an Exposure Analysis Checklist in your agency and if so, to what extent.

a) We use an Exposure Analysis Checklist for all of our new commercial business, regardless of premium size

b)  We use an Exposure Analysis checklist for our new business accounts over a specified premium size  

c)     It is up to the producers whether they want to use this tool

d)     We don't use an Exposure Analysis Checklist in our agency

e)     We are not sure what an Exposure Analysis Checklist is



Still Crazy After All These Years: Lateral Moves and Non-Compete Agreements
By Jonathan S. Ziss, Esq.


Lateral moves among insurance agencies can be as hurtful and damaging as any breakup - but having the right agreements in place can help make severed employment relationships as amicable and drama-free as possible for all parties involved. 













Connecticut courts continue to expand the "motor vehicle use exclusion" in homeowners' insurance policies. In New London County Mut. Ins. Co. v. Bialobrodec, 137 Conn. App. 474 (2012), the appellate court held that negligent entrustment of a vehicle is not covered based on the motor vehicle exclusion. 






Firebrand Social Media   




The contract liability exclusion precluded coverage for negligent misrepresentation and fraud in the inducement claims arising out of a written contract, according to the U.S. District Court for the Middle District of Pennsylvania. Federal Insurance Co. v. KDW Restructuring and Liquidation Services, LLC, No. 3:07-01357 (M.D. Pa. August 17, 2012).  





By Thomas Paschos, Esq.


In In re Liquidation of Integrity Ins. Co./Sepco Corp., --- A.3d ----, 2012 WL 3600009 (N.J.Super.A.D. August 23, 2012), the court addressed two appeals, which raised the same issue of the application of conflict of law principles to breach of contract actions filed by claimants Sepco Corporation and Mine Safety Appliances Company (MSA) against Integrity Insurance Company in Liquidation. These appeals followed the denial of the claims of each by Integrity's Liquidator, as based on an improper method of allocating loss, and the affirmance of the Liquidator's decision by the Special Master and the trial court overseeing the liquidation.


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