E&O Weekly Prevention
Strategies for the Professional Agent
January 29, 2015
Agents of America


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AOA News, Views, Tips & More

Agents are sometimes unclear as to their duties relating to the financial condition of an insurer.  Some E&O carriers highlight the use of a rating agency and often reference a rating standard in the insolvency exclusion found in many E&O policies.  While ratings provide an important resource for agents, their use is not necessarily determinative of agent's due care.  Agents should understand their legal duties and the use of insurer ratings, being careful to substitute the judgment or requirements of their E&O carrier for their own professional judgment and the best interests of their clients, check out Part 2 of our featured article by Burke Coleman, Esq, on agent's liability regarding Insurer Insolvency. To read Part 1 CLICK HERE.



By W. Burke Coleman, Esq. of Demotech, Inc.




The insolvency exclusion in many E&O policies uses an insurer rating standard to define the conditions of the exclusion.  But agents should be careful to distinguish the requirements of their E&O policy from their legal standard of care, understanding the implications of both.  The case law reveals that while ratings may be a factor in determining agent liability for insurer insolvency, they are a single factor among many and ratings alone are not necessarily determinative of due care.


National Cyber-Security: The President Weigh In

By Seth L. Laver, Esq., Jennifer M. Mannion, Esq. and Jason L. Ederer, Esq. of Goldberg Segalla LLP


Data breaches and cyber-security issues are hot topics.  Any company that utilizes electronic means to conduct business, obtain and store information or customer data is subject to the risk of a data breach.  The effects of a breach can be devastating.  We have recently blogged about practice pointers and tips for companies and boards of directors to be gleaned from high-profile breaches such as the one facing Sony.  Against the backdrop, President Obama weighed-in on the significance of cyber crime.


Mind the gap when switching D&O, professional liability, and other claims-made insurance policies

By Christopher Graham, Esq. and Joseph Kelly, Esq. of Jones Lemon & Graham LLP


Switching insurers? You're considering switching the insurer for your company's D&O, professional liability, or other claims-made insurance policies. Many insurers want the business. But, as is typical, their policies include a version of prior-and-pending-litigation exclusion.


Collusion Not Required Under Illinois Law for Insured v. Insured Exclusion to Apply

By Kathryn A. Formeller, Esq. of Tressler, LLP


Insured v. Insured exclusion precluded coverage for breach of fiduciary duty claims against failed bank's former directors and officers. The court further found that collusion was not necessary for the exclusion to apply. Travelers Casualty and Surety Company of America v. Andrew Bernhardt, No. 14-CV-128, 2014 U.S. Dist. LEXIS 152416 (N.D. Ill. Oct. 28, 2014).


By Allen R. Wolff, Esq, and Vivian Costandy Michael, Esq, of Anderson Kill


Insurance companies often invoke a policy's cooperation clause to compel a policyholder to share privileged defense information even after the insurance company has reserved the right to deny coverage at a later date.  At one extreme, the policyholder might withhold all defense information and risk prompting the insurance company to issue a disclaimer of coverage for failure to cooperate.  At the other end of the spectrum, a policyholder might lose the protection of litigation privileges by giving the insurance company unfettered access to defense 

Illinois Condominium Property Act Does Not Impose a Duty on an Insurance Producer to Procure Sufficient Insurance Coverage Compliant With That Act

By Donald A. O'Brien,Esq. of Hinshaw & Culbertson LLP


Royal Glen Condominium Assn. v. S.T. Neswold and Associates, Inc., Case No. 2-13-1311 (Appellate Court of Illinois, Second District Sept. 2, 2014).


Defendant insurance producer began serving the insurance needs of plaintiff Royal Glen Condominium Association in 1999. The condominium property, built around 1978, consisted of two buildings that did not have sprinkler systems, which the Village Code began requiring 2004. In 2009, plaintiff purchased through defendant a "Condominium Pac Plus" policy, which included coverage for complete replacement cost of the insured buildings. Plaintiff also purchased through defendant an "Ordinance or Law Coverage" endorsement with a $1 million limit.


Ninth Circuit Court of Appeals Demands More from Website Operators Before Terms of Use Will Bind Users

By Adam R. Bialek, Esq. and Kerianne Losier, Esq. of Wilson Elser


The Ninth Circuit's recent opinion in Nguyen v. Barnes & Noble Inc., No. 12-56628, August 18, 2014, US 9th Circuit, provides insight regarding courts' treatment of Internet-based contracts of interest to those operating in the e-commerce space or any website owner seeking to rely on provisions contained in the website's Terms of Use or other posted policies.


Employer Dress Code Policies Under the Microscope as Supreme Court Reviews Abercrombie & Fitch Case

By Madeline S. Baio, Esq. and Caroline J. Berdzik, Esq. of Goldberg Segalla LLP


A suit brought by the Equal Employment Opportunity Commission (EEOC) against national clothing retailer Abercrombie & Fitch Stores, Inc., demonstrates why employers should carefully review any dress code policies with counsel, particularly as they may conflict with attire worn for religious reasons. Interestingly, the case could have important ramifications not only for employers but also employees. 


5 Great Sales Questions Every Person Should Use

By Mark Hunter The Sales Hunter


I talk so much about the role questions play in the selling process and the need for every salesperson to have at least 5 questions they can feel comfortable using.


I think it's appropriate to share what I believe are 5 great questions:                                                  


What are the outcomes you're expecting?

Letter From  the Publisher

Protecting Your Reputation


As every Insurance Agent knows, their most important asset is their reputation, it takes years to build and just one mistake to ruin. Understanding the issues is the first steps in avoiding E&O Claims. AOA has created a three book series dealing with 56 different E&O topics and issues agents face every day. Enter promo code
WPD20 at checkout for an additional 20% discount.



Book One - 

A Comprehensive Guide To Avoiding E & O Claims


Book Two - 

E&O Exposures in the Sales Process

Book Three - 

E & O Exposures By Line of Business



Is your Insurance License renewing soon? 

Is your agency licensed in multiple states? Does your agency maintain nonresident licenses?   Do you know when renewals are due? Did you know a resident change requires address changes in the states in which an individual holds licenses? If you need assistance with any of your licensing needs go to the experts Supportive Insurance Services


Do You Need Continuing Education?

Complete your entire State-Required CE Online with WebCE! AOA 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. 


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Angelo J Gioia

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