To paraphrase Abraham Lincoln, you can please some people all of the time, and all people some of the time, but you can't please all people all of the time. In a client-based profession, these words will always ring true. From insurance producers to attorneys, and all professions in between, we will inevitably have clients who are disappointed with some service we have provided–justifiably or not. As professionals, we must accept that our clients will not always be pleased, and may not recognize the extent of our efforts to achieve the result.

But where does client dissatisfaction cross the line and become an E&O claim? When should we report this dissatisfaction to our E&O carrier? These are hot issues that courts around the country consider with increasing frequency. As an insurance producer, you must keep them in mind not only when running your own agency, but also when counseling any professional insureds you have as clients.

Almost every professional liability insurance policy is a “claims made” policy, which typically provides coverage only for claims first made against the insured and reported to the carrier in writing during the policy period. Coverage also is provided for “potential claims,” which generally are defined as any act, error or omission that might reasonably give rise to a claim, provided the insured first becomes aware of the potential claim and gives written notice of it to the insurer during the policy period. Thus, the notice requirements of a “claims made” policy are different from those of an “occurrence-based” policy. Whereas late notice generally will preclude occurrence-based coverage only where the carrier has been prejudiced, a late report under a claims-based policy will void coverage even in the absence of prejudice.