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​Back in 1978, the United States Supreme Court issued a landmark decision concerning seven dirty words used by comedian George Carlin in one his monologues that if spoken on the radio would result in fines by the FCC.^[1]  While we will not say those seven words here, now that we have your attention, we would like to address some of the words that insurance agents and brokers should avoid using in their communications with customers and potential customers in order to help prevent, or lessen, possible E&O claims and lawsuits. In our experience, the use of certain words or phrases by insurance agents and brokers, (especially when used in your website, flyers, advertisements and marketing material, digital or otherwise), should be avoided because they can be used by insureds against the agent or broker in an E&O claim or lawsuit to create duties and responsibilities never agreed upon or intended.  In this issue of "The E&O Report", we discuss some of these words and phrases and why avoiding them is the best practice to follow.

We understand that competition is tough. Reaching customers, getting eyeballs and "clicks" is important. Turning those potential customers into insureds is even more important. That goal often requires an aggressive pitch that typically comes with significant puffery. However, what you may deem to be harmless marketing hyperbole, can create a higher legal standard and turn a defensible E&O claim into something much more problematic.     

No matter the mode or medium, when agents and brokers communicate, verbally or in writing, with customers they should avoid using “loaded" words and/or terms.  Examples of some we have seen that have been used against insurance agents and brokers are as follows: "best available coverage," "broadest coverage," "full coverage," "complete coverage" and the "Cadillac of coverage."  When an insured has a claim that is not covered by their insurance carrier, and these terms have been used by the agent or broker, the insured will often base their E&O claim/lawsuit on their use. Worse still, they will argue for a greater, heightened duty of care, because the words used promise more than the “procure the coverage requested" standard that the Court of Appeals set forth for New York insurance agents and brokers in the Murphy case.^[2]  For this reason, it is best for you to avoid using these types of words and phrases. 

Another area that we have seen issues arise with words used against agents or brokers is in the language contained in proposals or quotes provided to insureds.  We have cautioned over the years that you should not use the phrase "coverage recommendations" in an insurance proposal. That phrase connotes an assumed duty of analysis not placed upon the broker or agent by force of law in the absence of the assumption. Rather use the term "coverage options" which properly places the responsibility of ultimate decision making on the insured who knows its insurance needs best. We have been involved in many matters where the word "recommendation" was used against our agent or broker clients when an issue or problem arose in connection with coverage for a claim. The insured asserted that the agent or broker should have liability for the uncovered claim because they were the ones that made the "recommendation" concerning the particular coverage that should be obtained.  In addition to not using the word "recommendation," you should also avoid the use of the term "all risk" coverage in proposals or quotes.  "All risk" coverage is an insurance term whose technical and legal meaning is not usually known to anyone outside the insurance industry.  In E&O litigation insureds, attorneys, and even judges have interpreted that term to incorrectly mean that all risks…of any type…that an insured may sustain are, or should be, covered by the insurance policy.            

A final area we need to address is the language you use on your websites.  Over the past few years we have been involved in numerous E&O claims and lawsuits where the language employed on agents and broker's websites, innocuous to them, is used as a sword to cut at our legal defenses. Never underestimate savvy and aggressive attorneys who, like we do on your behalf, scour the websites of those suing our clients for usable material. For example, avoid using, as they can be problematic, words like "professional," "expert," or "specialist."  These words can be used against the agency or brokerage in litigation to argue for a higher duty of care and/or a "Special Relationship" to the insured.  This will increase the potential for E&O liability. 

The prudent insurance agency or brokerage should carefully consider the words that it uses to communicate with its customers and potential insureds.  Always remember that the words that you use can and will be used against you in a court of law in connection with an E&O matter!  However, if you handle your words in a careful manner, that is something that you can hopefully avoid.

Submitted by:

James C. Keidel, Esq.
Howard S. Kronberg, Esq.
Keidel, Weldon & Cunningham, LLP  

[1] Federal Communications Commission v. Pacifica Foundation, 438 U.S. 726 (1978).

[2] Murphy v. Kuhn, 682 N.E.2d 972 (1997). ​

Keidel, Weldon & Cunningham, LLP concentrates its practice in the defense of insurance agents and broker's errors and omissions claims and litigation, errors and omissions loss control counsel and education, insurance coverage analysis and litigation and insurance regulatory matters. Please direct any comments or questions to James C. Keidel, Esq. by mail to the main office of Keidel, Weldon & Cunningham, LLP, at 925 Westchester Avenue, Suite 400, White Plains, NY 10604, telephone at (914) 948-7000 or e-mail at jkeidel@kwcllp.com. The law firm also maintains offices in Syracuse, New York; New York City, New York; Wilton, Connecticut; Fair Lawn, New Jersey; Warwick, Rhode Island, Philadelphia, Pennsylvania, Williston, Vermont and Naples, Florida.