E&O, D&O, Cyber and EPL – what do they have in common?

The one major issue they all have in common is that there is no uniformity in the various carrier policy forms. Each carrier has their own issues which makes them different. The difference could be a good thing…it could be a negative thing.

When dealing with these various management liability coverages, extreme caution needs to be exercised especially when an agency producer is presenting the carrier proposals. Obviously, the last thing the client should focus on is the premium because there is certainly the possibility that the client will get what they pay for. There is a good chance that the premium is less because the coverage is less.

What should a producer do? A couple of suggestions to consider.

A good starting point is for the producer to make every effort to understand the actual coverages. If the agency is looking to aggressively market any of these coverages, they should consider asking one (or more) or their main markets to provide them with some solid product knowledge. In other words, what makes one form better than the other. If they are using wholesalers to access some of these markets, look for wholesalers that have a solid level of expertise. Many carriers are willing to come to the agency to do some product education.

Review the various policy forms. Yes, that means actually read the policy forms – a lost art among many in the business. You can count on the client asking some questions. Having some more in-depth knowledge of the form is certainly recommended. However just because you read (and think you understand) the coverage form does not mean that you should be giving your opinion on whether a particular scenario would be covered. These forms can be difficult to truly understand. If the client has a question, consider asking the carrier underwriter for their opinion.

When you present the various carrier proposals, include 1) any carrier marketing material for the coverage being presented and 2) the applicable specimen forms that would essentially mirror the coverage if the client orders the coverage. Give them time to read and digest the coverage. This may very well prompt some additional questions. Once again, get the carrier underwriter or carrier claims person involved. It is important to understand that they may not want to give an opinion either. Typically, carriers shy away from addressing hypothetical claims questions.

These coverages can be very complex. In addition, to properly answer a claims questions requires the facts and that is difficult with hypothetical questions.

Bottom line, exercise caution when dealing with these coverages. Another thing that is common with these coverages – the claims when they happen can be fairly large. The last thing you want is to make a mistake that results in an E&O claim against your agency.

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