The Advantages of Retaining Coverage Counsel to Defend Insurance Agencies in Errors and Omissions Claims
Individuals and companies who provide a service for a fee, such as insurance agencies, carry errors and omissions insurance to protect against a negligence claim made by a client. While these claims are most often defended by professional liability attorneys, there are clear advantages to retaining a liability attorney who is also familiar with insurance coverage.
Insurance Coverage Analysis Potential
An attorney familiar with coverage is accustomed to analyzing allegations stemming from an underlying complaint in connection with one or more insurance policies to determine whether a policy’s coverage applies. Insurance agency errors and omissions claims often require an analysis of underlying coverage issues, in addition to the typical standard of care concerns. The ability to understand and interpret underwriting material, insurance policy language can often make
Underlying Policy Denies Coverage for Loss
Another advantage of retaining counsel familiar with insurance coverage for these types of matters relates to coverage directly. Occasionally, the underlying insurance carrier that agreed to issue the policy covering the loss will attempt to disclaim coverage due to the error or omission of the insurance agency.
In those circumstances, an insurance carrier would have previously sought a coverage opinion from a coverage attorney prior to disclaiming coverage under an insurance policy. This means that at least one other attorney with experience in coverage law is involved. As such, it is beneficial to the defense of these claims to have counsel familiar with analyzing coverage to respond on equal footing.
Knowledge of the Industry
Counsel with insurance coverage experience can also bring the next level knowledge of the insurance industry, which includes the lingo, relationships and duties of the agency to both the customer and carrier, and the potential liability stemming from those duties.
General defense counsel may or may not be familiar with these principles. While this may seem like an obvious statement, the clients being served will benefit from counsel with knowledge of the industry at the center of the dispute.
Potential Bad Faith Claims
As in many types of claims that involve a coverage dispute, there is the potential for a bad faith claim. Counsel familiar with analyzing coverage is all too aware of the law involving bad faith claims and would be better suited in handling professional liability claims involving insurance agencies.
For these reasons, retaining counsel familiar with analysis of insurance coverage to defend insurance agency errors and omissions claims will allow for a more thorough and positive outcome for the client.