E&O Coverage Exclusions - More Holes Than Swiss Cheese?

[Full Throttle]

E&O policy exclusions that I just read on a policy disclaimer from a main stream E&O carrier most associations go through (my summary), #3 is the most disappointing in my opinion. Even if I do not misrepresent a product, but a client alleges I did, no coverage.


1. Unauthorized release of private information.

2. Based upon the collecting or failing to collect a premium payment.

3. Actual or alleged misrepresentation of an interest rate, dividends, orguaranteed columns in an insurance contract, or a dispute over premium payments.

4. Any tax or financial planning advice except as it pertains to the specific productsold.

5. Any duties as a third party administrator of a plan.

 

[somarco]

Every E&O policy I have seen has holes in it. Not worth the paper it is written on in my opinion. But carriers say I have to have it so I get the cheapest one I can find. Figure none of them are going to pay out any way.

 

[BNTRS]

This jives pretty well with my impression on the P&C side of the business (sorry P&C dudes) all they do is try to duck out of coverage.

Not that long ago a Nationwide agent tried to recruit me as his life and financial services guy. I wasn't all that interested, but we did the whole song and dace where went met with the RVP to discuss details.

At the beginning of the meeting the RVP asked the agent about claims on Hurricane Irene, at which point in time the agent announced very happily, "Nothing, it'll be taken care of by FEMA."

The RVP spent way too long rejoicing in how he was so lucky otherwise it would have destroyed his loss ratios.

I was then informed that life business had a 2-4 charge back period for lapse and death claim (that's standard life products, not HECV products, Nationwide doesn't have one and wouldn't know where to begin with one). When I scoffed at that I was told, "Hey, you need to make sure you are writing quality business."

Firming up my long held belief that they only pay claims by mistake, yeah they make a lot of mistakes, blah blah.

 

[Guest]

E&O policy exclusions that I just read on a policy disclaimer from a main stream E&O carrier most associations go through (my summary), #3 is the most disappointing in my opinion. Even if I do not misrepresent a product, but a client alleges I did, no coverage.

It is highly likely that a attorney will take the case for an actual misrepresentation on a contingency basis. However, it is highly unlikely the attorney will take the case for an alleged misrepresentation on a contingency basis. Considering the amount of the financial damage from the alleged misrepresentation and the attorney's cost to sue may be why a life agent rarely, if ever, is sued for alleged misrepresentation of interest rate, dividends or guaranteed columns in a insurance contract or a dispute over premium payments.

 

[Full Throttle]

Having no coverage when I do everything right because a client alleges I misrepresented a product is bullshit. Even if the odds of being sued are small.