I hope that each of you reading this E&O Report, as well as your families and everyone at your agency or brokerage, are all healthy and surviving the coronavirus pandemic.  The past few months have truly been unprecedented, across the country and around the world, but especially here in New York.   Unfortunately, as a result of the coronavirus pandemic many individuals and businesses have experienced losses that insurers have denied coverage for.  During the past three months, my partners and I have received hundreds of telephone calls and emails from insurance agencies and brokerages that have asked for our guidance concerning how they should handle those claims.  While the courts in New York were closed for a while, they recently opened up again and, as a result, we have seen a number of lawsuits filed already against insurers based upon their denials of coronavirus related claims.  Although we have not yet seen any coronavirus related E&O lawsuits filed in New York against insurance agencies and brokerages, some people are predicting that they may eventually come.  Coronavirus related E&O lawsuits have already been filed against insurance agencies and brokerages in other parts of the country. 

If you should find yourself in the unfortunate position where a client is threatening a potential E&O claim, or is asserting an E&O claim, or actually commences an E&O lawsuit against your agency or brokerage, be sure to proceed with caution in how you respond.  If this should occur, please contact us to help you determine the best course of action for how your agency or brokerage should proceed and handle the situation that has arisen. The partners at KWC regularly counsel insurance agencies and brokerages concerning how to deal with potential E&O claims in order to minimize the likelihood that they would escalate to an actual claim or lawsuit.  Additionally, the KWC attorneys have handled in excess of 6,000 E&O claims and lawsuits for insurance agencies and brokerages.  A coronavirus related E&O claim or lawsuit, if one is made, would be no different than the thousands of matters the KWC attorneys have handled, other than the fact that the effects of the pandemic are much more wide spread. In our experience, a potential E&O claim, actual claim, or E&O lawsuit that is dealt with swiftly will often help in achieving a better outcome for the agency or brokerage in the end.  

We have also started to see some perilous exclusions find their way onto some Insurance Agents & Brokers E&O policy forms. Here is a quick sample of one that we have seen recently.

It is hereby agreed and understood that the following exclusion is added to the EXCLUSIONS section of the Policy.

This insurance does not apply to: Any Claim or Event based upon, caused by or arising out of, in whole or in part, directly or indirectly, the Coronavirus Disease (COVID-19), including any mutation, variant, subtype, strain, mixing with human flu viruses or reassortment of such viruses.

This exclusion applies even if the Claim against any Insured alleges negligence or other wrongdoing in the: a. Supervising, hiring, employing, training or monitoring of others that may be infected with and spread of such communicable disease; b. Testing for such communicable disease; c. Failure to prevent the spread of such communicable disease; or d. Failure to report such communicable disease to authorities.

It is further agreed and understood that for any Claim made, Suit brought or Event which is excluded under the terms of this endorsement, the Company shall not have the obligation to defend, adjust, investigate or pay any cost for investigation, defense, adjustment or attorney fees arising out of such Claims or Events.

Be aware of these types of broad-based exclusions, that we are starting to see pop up in the marketplace.

I hope that the predictions of coronavirus related E&O claims and lawsuits being made against insurance agencies and brokerages are wrong.  My partners and I truly believe that there is likely no legal basis for such claims to be made against insurance agencies and brokerages based upon the existing New York law.  However, if you should find your agency or brokerages facing a coronavirus related E&O potential claim/claim or lawsuit, please contact us.  As a member of Big I NY, all of us at KWC are here to help you.                                                                                     

Submitted by:
James C. Keidel, Esq.
Keidel, Weldon & Cunningham, LLP