The question of the month deals with professional liability insurance for insurance agents and brokers. Such insurance is a required coverage for most insurance producers. There is no standard form for the coverage since each insurer in the market develops its own policy in accordance with its own underwriting principles. However, a general overview of an errors and omissions policy's coverage agreement, exclusions, and other provisions will help in understanding this coverage. There are also some prevention suggestions offered that will enable one to gauge an agency's exposure to errors and omissions (E&O) claims. See the designated article in the Bulletins.

Also in the Dec Page is an article taken from the Professional Liability Monthly, a national professional liability newsletter published monthly by Goldberg Segalla, LLP. This article discusses the potential for conflict between an agency and its insurer and offers several loss control procedures that agencies can follow in order to reduce the E&O exposure arising out of the agent/insurer relationship.

The court cases deal with the business risk exclusion and the requirement of notification. The Georgia Court of Appeals handled a dispute between the insurer and the insured over coverage for a claim of defective workmanship. The court discussed the business risk exclusions that can prevent coverage for a defective workmanship claim, as well as the difference between risks that are covered by the general liability policy and those that are not meant to be covered. In West Virginia , an appeals court reviewed a case wherein the trial court had ruled that the insurer improperly cancelled an auto policy without giving notice to the insured and to the loss payee. The main point here was the fact that the insured had allowed his policy to lapse and then, after an accident, paid the premium and wanted the policy reinstated. The appeals court had three issues to face: whether state law required that an insurer send a notice of cancellation of a policy where the original policy has expired on its own terms; whether the law required the insurer to send a notice of cancellation when an insured fails to accept an offer to renew an expiring policy by paying the required renewal premium by the due date; and, whether the law required the insurer to notify the loss payee under such circumstances.

Questions and Answers

Is settling from a pipe leak covered or excluded? See Settling due to Leaking vs Natural Causes Is a pig cooker that is towed behind a vehicle considered a trailer? See Trailer Includes a Pig Cooker? Does damage other than intended when a youth vandalizes a vehicle count as vandalism? See Vandalism and Unintended Damage.

If a condominium association damages units in the process of making repairs, who is responsible for the damage to the units? See Association Causes Damage in Making Repairs. Does the member of a boat club have any ownership interest in the club's boats, or are they considered to be rented? See Boat Club Member an Owner or Renter of Boats. When an adult child is in the military and away from home, is he still considered an insured on the parent's homeowners policy? See Homeowners Policy Provides No Coverage for Son. Are titles to an insured's vehicles considered part of the vehicles or personal record? See Vehicle Titles as Personal Records.

The Insurance Survey

This discussion on the General A- pages provides practical aspects of selling a new account or reviewing an existing one. The article consists of three sections: how to perform a survey of loss exposures; suggestions for setting up a successful risk management program; and a guide for auditing existing policies. See The Insurance Survey.

SCOPE Insurance for Medical Complications

With all the attention on health insurance reform and the rising costs of treatment and medications, medical tourism is growing in popularity. Along with facilitators who help arrange trips overseas so someone can get treatment cheaper in a different country, there are now providers of insurance for complications that may arise from such travel and treatment. The SCOPE policy is such a policy. It provides coverage for complications that arise in the destination country, in the origination country, and coverage for legal expenses in the event a lawsuit is filed. See Scope Insurance for Medical Complications.