Always know your clients insurance needs to reduce the likelihood of an E&O claim. Imagine if you will a regular client purchases general business liability coverage through your agency every year but never discusses or requests cyber liability coverage for his firm. Several years hence, the client’s firm suffers a data breach and loss which is not covered under their existing business liability policy. The client makes a claim, alleging that due to his long term relationship the agent should have known that the client business handled sensitive data and therefore should have recommended cyber liability coverage.
What can you do to prevent this?
In most instances, the client making such a complaint may not have a very strong case. Although the agent is required to procure the coverage that the client requests, he is not necessarily responsible for managing all their risks. Although the agent in this scenario probably would have been wiser to suggest cyber liability coverage as a matter of good practice, he may not be legally liable if the client never disclosed that the business handled sensitive data. However, under certain scenarios the tables could be turned. For instance, if the agent held them out as a risk management expert or a specialist in technology risk they could be held to higher standard of care. Learning more about your client’s business may help you write more business and avoid a potential E&O claim.
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