Thursday, November 10, 2016

Choices and Options and Bears. Oh My.

It seems that many of the fun things I do these days have something to do with my grandson. Earlier this year when the weather was warmer we made a trip to the Cleveland Zoo. Cleveland has a great zoo in my humble and totally unscientific opinion.  And there are MANY choices and options as to where you can spend your time and energy. We navigated through the day reasonably well, but I have to admit once we saw the lions and tigers and bears, we spent the rest of the day making it up as we went. We had fun and it was a successful trip, but it could have been much more efficient and a little less stressful if we were a bit better informed.

In our current insurance marketplace, being informed and having a plan is critically important given all of the options we face every day. What can make it more challenging are the various positions insurance carriers take on a variety of issues. I’ll use a fairly common subject as an example; adding entities as additional insured to an Errors and Omissions (E&O) policy. (this could also apply to D&O and/or EPL)

When writing a GL policy you know that just about everyone hiring sub-contractors requires that the sub name the hiring entity as an additional insured (AI). In addition it's not uncommon to see requests for waiver of subrogation and primary non contributory wording to be added as well. And then there's the job or entity specific AI wording, usually requesting everybody and their brother/sister to be included in the AI wording.

In the world of E&O insurance, it's not that easy. In the past few years, more carriers have been willing to consider including entities as additional insured on an E&O risk, but there are still many carriers and classes where it's limited or not an option. Why would a carrier balk at doing this, and just as important to you, how can you advise your client on this subject? I'll list some reasons for you to consider, and in the next post I'll explain why this is an issue, as well as some discussion points you should consider with your customer.

1.  There may be an "insured vs insured" exclusion on your client's policy

2.  The incident in question may not trigger the policy coverage provisions. Professional liability and/or E&O policies are triggered by an error or omission in providing or failing to provide professional services.

3.  The insurance carrier in question has a reinsurance agreement and the reinsurer will not allow or accept AI's on the policy.

4.  Your customer may suffer a reduction in policy limits in more than one scenario

5.  You  may be open to an E&O claim by adding an AI

If you have a situation that's pressing and can't wait until the next post, by all means call or email and I’ll be happy to help. Call 800-442-8063 xt 171 or email at

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