E&O Prevention
Strategies for the Professional Agent
September 10, 2015

Agents of America


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AOA News, Views, Tips & More
6 Tricks Job Applicants Use To Fool Hiring Managers
By Michael Mercer, Ph.D. of Mercer Systems, Inc. 
Certainly, pre-employment tests help you assess what job applicants really are like under all the smoke-&-mirrors and tricks they use on hiring managers. 
Job applicants put on a show to impress you.  It's drama.  It's theater.  It's designed to fool you into mistakingly thinking the applicant is wonderful so you foolishly make a job offer.   
So, let's expose tricks or games job applicants use to make you think they are wonderful, although they are not. 

Kathleen M. Bonczyk, M.B.A., Esq.
Despite the fact that employment-based lawsuits represent one of the fastest growing types of litigation today, the vast preponderance of American businesses elect to go without Employment Practices Liability Insurance ("EPLI") coverage.

Insurance Broker Not Liable to Estate of Patron Crushed by Inflatable for Failure to Procure Coverage                        By Donald A. O'Brien, Esq. of Hinshaw & Culbertson LLP
Kimberly Johnson v. Doodson Insurance Brokerage, LLC, No. 14-1379 (USCA, 6th Cir. July 15, 2015)

The Cleveland Indians Baseball Team (the Team) hired National Pastime Sports (Pastime) to produce events at its baseball games that included kids' attractions such as inflatable slides. The production contract required Pastime to secure a $5 million CGL Policy and they submitted an application to their insurance broker, Doodson, for the Kids Fun Days events advising that inflatable attractions would be included.

By Finley T. Harckham, Esq. of Anderson Kill P.C.

Insurance brokers are among the most important suppliers that any company deals with. Yet, often the arrangement between brokers and their clients consists of nothing more than a broker of record letter, or even a verbal authorization to present insurance proposals. As a general rule, a written agreement that addresses the scope of services provided by the broker and its compensation is important for a number of reasons. 

By Angelo J. Gioia, AgentsofAmerica.ORG
Occasionally a situation will occur where you are unable to place a coverage your client has requested. You have exhausted all of your resources including going to all of your markets, as well as attempting to approach the wholesale marketplace. The question now is what are your duties and responsibilities to your client?

By Keith Moskowitz, Esq. , Gail Schnitzer Eisenberg, Esq., J. Stephen Berry, Esq. of Dentons

Interpreting Oklahoma law, the US Court of Appeals for the Tenth Circuit recently held that the duty of good faith and fair dealing does not require that an excess insurer, unlike a primary insurer, affirmatively investigate the claims against the insured and initiate settlement negotiations if the insured's liability is clear and a judgment in excess of its policy limits is likely. SRM, Inc. v. Great Am. Ins. Co., No. 14-6160, 2015 WL 5011719 (10th Cir. Aug. 25, 2015), slip. op. available at https://www.ca10.uscourts.gov/opinions/14/14-6160.pdf.

By Scott Sweeney, Esq. of Wilson Elser et al

Ashley Madison, the self-described "world's leading married dating service for discreet encounters" is the latest high-profile social media website to sustain a cyberattack. Established to provide an opportunity for married persons to engage in extramarital affairs, Ashley Madison boldly proclaims that it is the "most successful website for finding an affair and cheating partners." Now, with media sources reporting the public disclosure of the names, addresses, credit card information and phone numbers of its 37 million members, the cheat facilitator has been cheated in what will likely amount to a very costly breach.

By Seth L. Laver, Esq. , Jennifer M. Mannion, Esq. and David E. Leach, Esq. of Goldberg Segalla LLP

Claims professionals, a/k/a "adjusters" play an important role in evaluating and defending an insured claim as part of the tripartite relationship. When something goes wrong, it is not uncommon for the insured to turn on her attorney but the adjuster is never a target, right? Maybe not. At least two jurisdictions, New Hampshire and Alaska, permit claims of negligence against individual insurance adjusters on the theory that they owe a duty of ordinary care to conduct adequate investigations into an insured's claim.  Pennsylvania recently considered the issue and concluded that the Pennsylvania Supreme Court may permit such a claim against an insurance adjuster.

By Kathryn A. Formeller, Esq. of Tressler LLP

A fidelity bond provided coverage for a lawsuit filed against an insured bank by third-party investors arising from the insured bank employee's involvement in a money scam. Avon State Bank v. BancInsure Inc., Nos. 14-1265 and 14-2202, 2015 U.S. App. LEXIS 9120 (8th Cir. June 2, 2015).

The case arises from a scam involving an alleged multimillion dollar estate of a deceased African businessman. Ambrose Herdering (Herdering), a customer of Avon State Bank (Avon), was contacted by a man who claimed his father had passed away, leaving a $9 million estate in Africa.

By Alan R. Jampol, Esq. of Jampol Zimet, LLP

Policy Terms Under Prevention Doctrine
Where an insurer denies a claim and fails to provide funding for repairs, the insured is excused from failing to make repairs as soon as reasonably possible under the prevention doctrine. This is the recent holding of the California Court of Appeal in the case of Stephens & Stephens XII, LLC v. Fireman's Fund Insurance Co. (2014) 231 Cal.App.4th 1131.

By Thomas Paschos, Esq. of Thomas Paschos & Associates, P.C.

In Selective Way Ins. v. Hospitality Group, Inc., 2015 Pa. Super. LEXIS 398 (Pa. Super. Ct. July 7, 2015), seventeen-year-old Sean Nemcheck was killed in a car accident where he was driving his motor vehicle under the influence of alcohol. The accident occurred after Sean consumed alcohol that he allegedly obtained from the Ramada Inn during his sixteen-hour shift at the hotel.

By Dylan B. Carp, Esq. of Jackson Lewis P.C.

Two recent cases from opposite coasts confirm that employees do not have an unfettered right to steal their employer's documents notwithstanding the documents' potential relevance to a whistleblower retaliation claim.

In West Hills Research and Development Inc. v. Wyles, Cal. Ct. App. 2d Dist. Case No. B255768 (July 17, 2015), when West Hills terminated Wyles, its former in-house counsel, he purloined financial and other company documents.

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 RatingsŪ (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
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"Bringing the Best Together"
Angelo J Gioia

 "Everything you want is just outside your comfort zone." - Robert
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