Error Omissions
Error Omissions
Submit your information below so we can contact you with a FREE quote
[All fields are required.]
Actual Annual Revenue:
Verify:
=
I have read and agreed to theTerms & Conditions
Error Omissions
Error Omissions

Insurance Agency E&O: Discussing Coverage Gaps with Insureds

Insurance Agency E&O Discussing Coverage Gaps with InsuredsA recent case in Ontario, Canada highlights the importance of an insurance agent/broker’s responsibility to review coverage gaps with clients. In the Ontario case, a motion was allowed for summary judgment against an insurance brokerage and the individual broker for failing to meet their duty of care to arrange adequate insurance coverage.

The specifics of this case involve a client who was in a motor vehicle accident while operating his leased vehicle. The vehicle carried $1 million in primary limits under a policy issued to the lessor. The insured claimed he asked his broker to ensure that there was umbrella coverage on the vehicle. Although the broker had indeed arranged umbrella coverage with limits of $15 million, the policy language contained an exclusion for long-term leased vehicles. The umbrella insurance carrier had advised the broker about this exclusion but the broker had failed to pass this advice to the client. The umbrella carrier denied coverage in the motor vehicle accident based on this exclusion.

The court asserted that the exclusion indeed applied and that coverage was not available. It then turned to a broker’s duty of care and confirmed that they are obligated to advise an insured as to any gaps in coverage and to make all reasonable efforts to ensure that the insured was properly protected. The court rejected the assertion that the breach of duty had not caused the insured any damage, stating that the insured would have taken alternative measures to make sure the vehicle was properly protected had it known of the coverage gap.

It’s critical that insurance agents and brokers adopt best practices that include an active approach in discussing the details of a policy including potential insurance gaps. This will help to ensure that a client have the right coverage in place or the very least understand where gaps may exist in addition to minimizing the risk of a broker or agency facing an errors and omissions claim.

Errors & Omissions (E&O) insurance is our specialty, as we secure coverage for broad spectrum of professions including for insurance professionals. At Axis Insurance Services, we offer E&O insurance for agents and brokers, MGAs, MGUs, Surplus Lines businesses, Wholesalers, and other insurance specialists. We can tailor a policy to address your profile risk including the services you provide. Give us a call at (877) 787-5258 to find out more about our E&O programs.

 

Source: MONDAQ

 

Comments

comments

Blogged on: June 15, 2015 by Mike Smith
Error Omissions
Error Omissions
Submit your information below so we can contact you with a FREE quote
[All fields are required.]
Actual Annual Revenue:
Verify:
=
I have read and agreed to theTerms & Conditions
Error Omissions
Error Omissions