Take Time to Minimize Your Exposure to E&O Claims

During my more than 20-year career in the insurance industry, I have spent hours working with my colleagues to prevent hard-earned, front-end revenues from leaking out the back door due to errors and omissions.

When a claim is denied, we have all heard the allegations:

• What do you mean we’re not covered for …
• I said, “ABC Co.” not “XYZ Corp.”
• How could you have forgotten to notify the insurance company?
• Why would I read the policy – I relied on that certificate you issued.
• What invoice? I was waiting to hear from you before I sent in my premiums.

As the market continues climbing, with increased activity comes increased workload, and increased opportunity for mistakes. These mistakes are ones that may occur before binding, during the contract phase, or post placement during the issuance of endorsements or certificates, or regarding notice of claims.

What can you do to minimize the likelihood of an E&O?

Document, Document, Document

Historically, business was in person or conducted by telephone, followed by hard copy writings. While meetings and telephone conversations continue, email and other electronic communications have more often become the norm and, in fact, are often the only source of back-and-forth communication. When a claim arises years after placement, details are important in determining who said what, to whom and when. It’s important to document when conversations occur, ensure the accuracy of the documents, and ensure they are easily retrievable even years later. Avoiding the “he said/ she said” courtroom battle will go a long way toward avoiding economic detriment.

Emails and other electronic communications should be prepared with proper grammar and avoid troublesome words or concepts that may be difficult to explain years later. How many corporate executives and others have been held to task for email content they wish in retrospect they had never written?

Before you hit the “send” button, read and re-read your proposed communication – and then send it only to the party or parties to whom it is intended. Responding to “all” can lead to unintended discussions and can be dangerous in terms of possible future liability exposure.

Avoid Differing Assumptions and Miscommunications

While it may seem during a conversation (voice or electronic) that all parties are on the same page, it is worth a few minutes afterward to confirm your understanding and circulate that understanding in writing among all participants to ensure there are no discrepancies. However distasteful it may be to engage in corrective discussions, never assume others walked away with the same understanding as you. Waiting to do this only once a claim arises will be too late.

Find an Ending

Take a few minutes before you send documents off to storage to review the communication and paper trail. The time to identify and correct discrepancies is before final documentation is concluded. Be satisfied that the file is complete – in order – and, if and when someone cares to review the file years later, you have already taken steps to make the review simpler and more understandable. If you take care to ensure all final documents are accurate and as agreed upon, E&O exposure can be reduced.