E&O Prevention
Strategies for the Professional Agent
August 20, 2015

Agents of America


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AOA News, Views, Tips & More

By W. Burke Coleman, Demotech, Inc.
The Arizona Supreme Court recently faced an interesting question of how a statutory requirement-and safe harbor-for insurers applies to agents.  In Wilks v. Manobianco, No. CV-14-0260-PR, 2015 Ariz. LEXIS 203 (Ariz. Jul. 9, 2015), the Arizona high court determined that a state law requiring the written rejection of uninsured and underinsured motorists coverage protects insurers but does not necessarily preclude a common law negligence claim against an agent for failing to procure coverage.

By Joseph J. Lazzarotti, Esq. of Jackson Lewis P.C.

The answer to this question may depend on the actions that the insured takes when it applies for coverage and during the period the policy is in force. The demand for cyberinsurance that is intended to cover exposures from data breaches, among other things, has exploded in recent years, reports The Hill. This is due in large part to the many widely reported data breaches affecting large, well-known companies. Now that more claims are coming in, carriers are looking with more scrutiny at the representations made by their policyholders when they applied for the coverage, as well as their actions during the period of coverage. Carriers consider these representations and anticipated security practices to be critical to the underwriting process and conditions on which the coverage is based. In short, inaccurate representations and failing to make good on carrying out the data security practices promised, could leave a policyholder without coverage.

By Angelo J. Gioia of AgentsofAmerica.ORG

When taking over an account by a broker of record letter, it is important to recognize that if not handle properly, that there is the potential of having an Errors & Omissions claim being made against you?  The key to avoiding having a claim made against you, is to recognize that when the opportunity present itself, that your work is not done; in fact, it is actually just beginning. 

By Aaron J. Aisen, Esq. and Frederick J. Pomerantz. Esq. of Goldberg Segalla

In recent months, two more companies in the healthcare industry have been hacked. UCLA Health announced on July 17, 2015 that it was the victim of a "criminal cyber attack" and "as many as 4.5 million individual potentially may have bene involved in the attack."  This comes on the heels of another attack in May 2015 against Medical Informatics Engineering whose subsidiary is NoMoreClipboard, an online medical information sharing service used by patient and physicians alike.  Both of these episodes are the latest in attacks against health insurance and healthcare providers including Anthem Blue Cross Blue Shield and Premera Blue Cross Blue Shield. With the uptick in these announcements, data breaches of this scope and type are quickly becoming commonplace.

By Marc Zimet. Esq. of Jampol Zimet, LLP

In what could have vast implications for start-ups providing services via smart phones, the California Labor Commissioner has held that an Uber driver is an employee, not an independent contractor. Uber is a smart-phone application that allows anyone to offer driver services to users requesting a ride. Drivers can choose their own hours and respond to driver requests whenever they want to work. Companies that own applications similar to Uber that allow users to exchange services, such as housekeeping and other driver services, face future hurdles in classifying employees and determining who is an independent contractor.
By Kathryn A. Formeller, Esq. of Tressler LLP

Due to material misrepresentations made by the insured's employee, coverage under a Crime Coverage Section was precluded for that same employee's embezzlement of the insured's funds. Scottsdale Indem. Co. v. Martinez Inc., 2015 U.S. App. LEXIS 10427 (11th Cir. Ala. June 22, 2015). 

By David J. Oberly, Esq. of Marshall Dennehey Warner Coleman & Goggin, P.C.

Key Points:
  • The doctrine of judicial estoppel precludes parties from taking differing positions on the same issue in separate legal proceedings.
  • Where an individual undervalues his or her property in bankruptcy, judicial estoppel may limit a later property damage claim/lawsuit.
  • Judicial estoppel may also completely bar a cause of action that a party failed to disclose in prior bankruptcy proceedings.
By Lindsay B. Nickle, Esq. and Kevin M. Scott. Esq. of Wilson Elser et al

Continuing the trend of states expanding their data privacy laws, companies that store and transmit personal information about residents of Nevada, Washington and North Dakota must now take note of additional data-element definitions and notice requirements following data breach incidents. In Nevada, the expansion of protected personally identifiable information (PII) now includes medical and health information while Washington sets a 45-day limit for notification and North Dakota removes the limitation to only companies that conduct business in the state. In addition, Washington and North Dakota now require notification of the state attorney general in certain instances.

By Kevin M. Mattessich,Esq. ,  Michael L. Zigelman,Esq. and Jonathan B. Isaacson, Esq. of Kaufman Dolowich & Voluck, LLP

In  Jacobson Family Investments, Inc. v. National Union Fire Insurance Company of Pittsburgh, PA, 2015 Slip Op. 05273 (1st Dep't 2015), New York's Appellate Division was asked to interpret the coverage afforded under a financial institution bond for losses arising from the notorious Madoff Ponzi Scheme.   A non-jury trial resulted in a $7.6M  damage award against the Insurer.   On appeal, the First Department unanimously reversed, on the law, holding that the losses were not sustained solely as a result of Madoff's activities as an "Investment Advisor."

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

Demotech, Inc.
Since 1985, Demotech, Inc. has served the insurance industry by assigning accurate, reliable and proven Financial Stability Ratings® (FSRs) for Property & Casualty insurers and Title underwriters. FSRs are a leading indicator of financial stability, providing an objective baseline of the future solvency of an insurer.  You can search the most current FSRs here.
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. 

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.

Excess & Surplus Lines Laws
We are happy to provide the 2015 Edition of Locke Lord LLP's Excess and Surplus Lines Law Manual.

This edition reflects all of the pertinent changes in the surplus lines laws and regulations of the 50 states and U.S. territories during the past year. We sincerely trust you will find this manual to be a valuable desk reference and if you have any questions regarding the contents, please contact John P. Dearie, Jr., Esq. Editor and Partner at Locke Lord LLP at jack.dearie@lockelord.com or (212) 912-2737
AgentsofAmerica.ORG newsletter is FREE! Also, if you have any thoughts, comments or suggestions, please email me at info@agentsofamerica.orgWe also would like to extend an invitation for you to join AOA's LinkedIn group at AGENTS OF AMERICA

"Bringing the Best Together"
Angelo J Gioia

"Don't let what you cannot do interfere with what you 
can do."  John Wooden
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