As you deal with the aftermath of Hurricane Matthew, we want to pass on some important advice in dealing with potential or actual E&O claims. We also want to remind you of some provisions of the Westport & First Specialty policies that provides benefits that are especially relevant in the post-Matthew environment.

Submit All Claims
We understand the temptation not to report small claims—those you think will be within your deductible. But for your sake, we strongly urge you to submit all claims immediately, whether active or potential. Why? 

Top 10 Reasons to Submit Your Claim:

1. The Swiss Re Corporate Solutions US Agents Claims Team handles more E&O claims involving independent insurance agents on any given day than you'll see in a year – perhaps in your entire career. The depth of knowledge and experience our claim handlers will bring to bear is just as valuable on small claims as it is on the large ones. So why not take advantage of our expertise in getting your claim(s) resolved, including preparation and execution of proper releases to protect your agency?
   
   
2. Your policy requires you to report Claims. Disregarding explicit contractual obligations imposed by your E&O policy in the middle of a catastrophe is likely to make a bad situation worse.
   
   
3. Potential claim situations do often turn into active claims, which can lead to possible coverage issues if not timely reported.
   
   
4. Reporting a potential claim doesn't lead to the loss of experience credits.
   
   
5. CAT claims often start small (within the deductible), but then escalate after the agency has admitted error.
   
   
6. The Westport 'Deductible Reduction Endorsement' may apply to your claim, reducing the deductible by up to $25,000. If you don't turn the claim in you may end up paying a claim "within your deductible" that should have been $0.
   
   
7. Even if the Deductible Reduction Endorsement doesn't apply, many policies have an 'Aggregate Deductible'. If you don't turn the claim in you will not receive a credit towards your aggregate deductible, which leads to the same result as the example above: you're paying deductible unnecessarily.
   
   
8. Catastrophes often reveal clear errors by agents. In such cases, we will attempt to settle those claims as early as possible to minimize costs. That's a win/win/win for you, your customer and Westport.
   
   
9. Our Claims Team can help guide you in how to best communicate with your client, the carrier or other third parties. In an effort to help or sympathize with clients, agents sometime make statements that can be construed as admissions. We can help you avoid that.
   
   
10. You have better things to do right now. Your customers have been impacted by the storm – and probably your agency, as well. Take care of your customers and leave the claims to us. We've got you covered!

Your policy may contain these additional coverages:

"We will pay up to $25,000 per catastrophe subject to a per POLICY PERIOD aggregate limit of $50,000 for the actual extra expenses incurred by you as a result of a catastrophe during the POLICY PERIOD beginning on the date of a catastrophe and for thirty (30) days thereafter.  The extra expense incurred must be incurred by you only to assist in the insurance claims processing needs of your customer(s) who have been affected by the catastrophe.  The catastrophe must be a declared catastrophe by the Property Claims Services.  A $500 deductible for each catastrophe shall apply.  Limits provided by this paragraph are part of and not in addition to the limits provided by this POLICY."

The First Specialty policy is similar, but the limits are $5000 per catastrophe subject to a per POLICY PERIOD aggregate limit of $10,000.  CAT Extra Expense is not included on our basic policy.

In order for these provisions to apply, (1) the expenses must be incurred during the policy period beginning on the date of a CAT and for thirty (30) days after – not before or after that window of time; (2) the expense must be incurred only to assist in the insurance claims processing needs of the agency's customer(s) who have been affected by the CAT; and (3) must result from a catastrophe declared by the Property Claims Service. 

"DEDUCTIBLE REDUCTION.  If any INSURED generates and maintains contemporaneous written documentation in the agency file of the refusal of any customer to accept any type of coverage or limit offered by the INSURED, and if the INSURED subsequently has a CLAIM alleging the failure to secure such, 100% of the INSURED'S DEDUCTIBLE for that CLAIM will be waived up to a maximum of $25,000, or until dismissal of such allegations, whichever is first."

Documentation is the most effective defense to an E&O claim.  This provision provides a significant benefit to insureds who can show documentation of their recommendations as well as their customer's decision not to follow those recommendations. While we will look for opportunities to apply this provision, please encourage your members to point out qualifying communications.

The waiver applies to 100% of the deductible up to $25,000.  Of particular note in a 'catastrophe' context: while some carriers only offer their 'vanishing deductible' benefit on the first such claim, this Westport provision extends to each claim that meets the terms outlined above. 

If you have any questions, please contact Laura Cornell, CIC at 803-760-1227 or lcornell@iiabsc.com.