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2020 Issues - The E&O Report


December 2020: A Review of the Special Relationship Doctrine in NY E&O Lawsuits

In The E&O Report over the years, we have written about positive trends in courts limiting the “Special Relationship” doctrine. Recall that the Special Relationship doctrine is the notion that an insurance agent or broker can be found to have taken on additional duties and responsibilities to its insured beyond the basic duty to procure the coverage requested or advise the insured that such coverage cannot be placed, as the Court of Appeals held in Murphy . [more]
While dating back to a proverb from the 1500s, it is not an urban legend, but Benjamin Franklin actually said, “Honesty is the best policy.” For our purposes today, I would rather quote Mother Teresa who astutely observed that, “Honesty and transparency make you vulnerable. Be honest and transparent anyway.” Of course, everyone in an insurance agency or brokerage should always conduct themselves with honesty and integrity at all times. While everyone should keep this in mind, they should also remember that they must always be careful of what language they may put in any writing; whether it is an internal communication, email, letter or anything else. In our experience, language contained in agency documents can sometimes be problematic when it comes to defending against an E&O claim or lawsuit. [more]
During the past year we have seen an increase in the number of regulatory investigations of insurance agents and brokers by the New York Department of Financial Services (“NYDFS”). One frequent area that insurance agents and brokers may be the subject of an investigation by the NYDFS concerns the handling of premium funds. In this issue of the E&O Report, we will discuss the New York laws and regulations applicable to how insurance agents and brokers should be handling premium money and the proper operation and maintenance of premium trust accounts. [more]
Recently we were pleased to report to a broker client that we were able to get the case against them dismissed right after the lawsuit was filed. The facts involved in that case are a great example of how counsel for policyholders attempt to pervert the New York Court of Appeals holding in Murphy v Kuhn and try to establish the existence of a special relationship in an attempt to hold brokers and agents liable as “guarantors.” In this issue of The E&O Report, we will review the facts of this case and also when a special relationship may, or may not, arise. [more]
As you know, our mantra to avoid E&O claims and lawsuits starts with you understanding that the greater responsibilities that an insurance broker or agent takes on, the greater the chance for a court to potentially find an assumed, or higher duty of care; something more than just procuring the coverage requested. That being said, a recent scenario that we handled is a good illustration of when an agency went beyond its usual duty actually helped prevent an E&O claim against the agency. [more]
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. [more]
If we did not have enough to worry about already, with the coronavirus pandemic still upon us, June 1st is the start of the Atlantic hurricane season. For the past six years, there have been named hurricanes that have developed prior to the official June 1st start of hurricane season. Many of the weather and hurricane experts are predicting that this year’s Atlantic hurricane season may be a very active one. [more]
Have no fear, although the Big I NY Annual Errors & Omissions Loss Control Seminars will not be able to be presented live this year due to the coronavirus pandemic, the presentations will still go on! This year, the annual E&O seminars will be presented virtually as webinars in order to allow you to get your continuing education credit and also receive a discount on your E&O policy, while still social distancing. If you are interested in attending the upcoming E&O webinars, please contact Big I NY and register. [more]
On March 30, 2020 the New York State Department of Financial Services (“DFS”) adopted emergency regulations requiring New York regulated insurers of life and annuity contracts, property and casualty insurers and premium finance companies to provide relief to New York consumers and businesses experiencing financial hardship due to COVID-19. The emergency regulations address cancellation policies and grace periods for the payments of premiums for insureds that have been adversely affected by the virus. [more]
During the past two months the world has been severely impacted by the coronavirus pandemic. The effects on individuals and businesses have been many and far reaching. Due to the spread of the virus, sporting and concert events have been cancelled, schools have been closed and the restaurant and travel business has been hit hard. During this time, many insurance agents and brokers have reached out to us to ask how they should handle inquiries from their insureds concerning coverage for potential claims that they many have related to the effects of the coronavirus. [more]
When discussing the most important E&O loss control practices that an insurance agency or brokerage can follow, documentation is at the top of the list. Unfortunately, even if everything is handled correctly for a customer, a situation may arise where there is no coverage for a particular loss. When this occurs, despite doing everything right, an agency or brokerage may find itself defending an E&O claim or lawsuit. In those situations, documentation is the key to the successful defense of the claim or lawsuit brought against the agency or brokerage. In this issue of The E&O Report we will review some of the documentation practices that every agency or brokerage should follow. [more]
As you know from our E&O Reports over the years, in addition to writing about certain timeless Best Practices and E&O prevention issues, we also write about issues that arise from litigation that we are currently handling. Like the Noble Laureate in Economics, John Nash, in the 2001 biopic “A Beautiful Mind,” we often start to see patterns in disparate E&O cases that, to us, are related and suggest a larger issue that may exist. Thus, we write about those issues through the narrative of discussing those matters. This is such an occasion. [more]
It has been several years Since our last holiday rhyme Based upon your requests We’ll do it one more time [more]
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