You are currently viewing InterWeb Highlight: What is a Claim and What Do I Do?

InterWeb Highlight: What is a Claim and What Do I Do?

  • Post category:E&O

This InterWeb Highlight is called “What Is A Claim and What Do I Do?”  

Today’s message will clarify the steps and help you access your E&O protection in the event of a problem.

Every so often I get a call from a client who has tried for months or years to resolve a matter on their own, has now come to the conclusion that the problem just isn’t going to go away, and is wondering if the E&O can reimburse him for the attorney fees, or sometimes even a settlement that has already been reached.  These calls are such a disappointment, because the answer is usually “no”. Here is an insured who has paid for E&O for years but did not use it properly.  Let’s try to make sure this doesn’t happen to you.  There are the three key points to remember. 

  1. Let’s start with “what is a claim.”  Every policy is different (so you have to read your own policy or ask your broker), but generally speaking it is usually a “written demand, for monetary damages, alleging a specific wrongdoing.”  Anything meeting that description should be considered a claim, in addition to the obvious lawsuit or arbitration proceeding.

    A common “grey area” is where the demand is merely a verbal complaint or grumbling, or where you realize that a mistake has been made and your client is currently unaware.   You should know the better policies have an "awareness provision" which allows you to report any incident or circumstance that you feel could give rise to a claim.  When reporting such incidents you are in essence "parking" your coverage if the matter later rises to meet the policy’s definition of a claim.  

  2. Point number two is this—It is important for you to report a claim or incident in the policy period in which you have first knowledge.  If you wait to report the claim until after the renewal, the insurer usually has a basis to deny the claim because you had knowledge of the matter prior to the effective date of the current policy and failed to disclose it.  

    Be prepared to provide the claim adjuster with any and all information concerning the matter. Be prepared to host a visit if the adjuster wants to come by your office.  Understand that they are going to make an observation about you, your character, how well you run your operation, how well documented your file is regarding your case, whether or not you’ll make a good witness  – all the things that will determine whether or not they will be successful in defending your case.  And do your best to stay calm and don’t be defensive.  After all, an E&O claim is really business; It’s not personal.  

  3. We’ve just mentioned what TO Do.  Point number three is about what NOT to do.  Keep in mind that it’s the insurer’s nickel – so they’ll want a say in how that nickel is spent.  

  • Do not engage your own attorney or incur any expenses that you don’t want to pay.  The insurer usually will only pay the expenses incurred at their direction.

  • Avoid discussing your situation with anyone other than your insurer or any attorney assigned by the insurer to represent you.

  • Do not admit any guilt or liability, or share your file with anyone other than the insurer or your attorney.

  • The bottom line is you can’t do anything that jeopardizes the insurer’s position monetarily or in their ability to defend you.

Hopefully, you’ll never need to use your E&O.  But, if you do, partner up with your insurer and the defense team.  Be realistic about the facts, the ability to defend the case, and the wisdom of settling versus going to the mat.  An E&O claim costs more than money.  A speedy resolution as fair as possible to all parties is the ultimate goal, because your time and attention are very valuable.  

Looking for an E&O Quote? 

InterWeb Insurance provides instant rates for Life Insurance agents and instant eligibility for those that qualify. You only need to answer 10 “yes” or “no” questions to see if your eligible. Obtain your E&O rate today by visiting our website For more information about our affordable E&O insurance please contact: Michelle Conover | (949) 287-4641 |

About the Author: 

This article was written & provided by Michelle Conover at InterWeb Insurance



Leave a Reply