After a major disaster, such as the Oklahoma tornadoes, as an insurance agent, you are probably being deluged with an enormous number of claims. Insurance companies have received more then 22,400 claims and counting, worth at least $85 million, after the most recent tornado outbreaks, the Oklahoma Insurance Department recently reported.
Generally speaking, after much assessment, a second wave of claims, against insurance agents by their clients, citing errors or omissions, may occur. Insurance agents E&O will provide the necessary coverage should you experience such claims. Many parties find themselves without the coverage they expected after a catastrophe, so this appears as a natural reflex for them to look to their insurance agents and brokers to fill any perceived gaps.
For the most part, the types of allegations and claims that may surface will be on a greater scale because of the number of people impacted. Any failure, on your part in the eyes of your clients, is then magnified, including:
• To procure a certain type of coverage (Flood, Earthquake, Hurricane)
• Failure to place coverage at all (due to an oversight)
• Failure to obtain adequate limits (under-insuring), or
• Failure to advise certain coverage was necessary
But there are certainly best practices that can minimize the resulting exposure and enhance the likelihood of a successful defense. To some extent, the claims that are likely to follow the recent tornadoes in the Midwest have their own characteristics. The number, severity, and landfall of tornadoes vary from year to year, but certainly exposure exists mostly in this area during every season.
The fact that a claim is made does not necessarily mean that there is liability on the part of the agent, as there are often viable defenses to such claims. Following certain “best practices” can help to eliminate some of the problems that lead to claims in the first place, enhance the prospect of a successful defense, and reduce the impact of the claims that are made.
Often agents live and work in the same communities as their customers, and are just as vulnerable to the effects of a tornado or other natural disaster. You may have completely lost all of your records, did not have them backed up, and had no plan in place to resume business as rapidly as possible.
This would certainly make defense of any claims made against you particularly difficult, making an insurance agents E&O policy your best defense. The key, however, is planning for recovery. While many agents’ clients have disaster recovery plans, those same plans may be deficient among the agents.