Agents’ E&O Exposures: ‘A Bear Behind Every Tree’

Web sites, in addition to traditional sources of litigation, are driving up errors and omissions premiums for insurance agents, according to Rick Oldenettle of Oldenettle and Associates P.C.

Speaking at the 42nd Annual Joe Vincent Sem-inar, held by the Independent Insurance Agents of Texas in Austin, in a presentation entitled, “Managing E&O Exposures: New Targets for Trial Lawyers–A Bear Behind Every Tree,” Oldenettle discussed some of the business practices agencies routinely use that could trigger E&O exposures.

Web sites, Oldenettle said, are becoming an increasing source of litigation, adding to already well-established E&O exposures such as insurance certificates, surplus lines placements, and every day communication with carriers.

Oldenettle quipped on the use of Web sites by insurance agencies, “Don’t have one.”

He said they are often full of promises about services that can come back to haunt the firm in court, including troublesome phrases such as, “We worry about your insurance needs so you can worry about your business.” He advised agents to have their Web site approved by a lawyer and to avoid puffing up the content.

“Agencies have a tendency to sell themselves on their Web site by saying that they are the best at what they do and can take care of everything,” he said. He cited an example pulled from an actual Web site as an illustration: “We will continually review your insurance program to be sure that it is competitively priced and suitable to your needs.”

He stressed the importance of using only facts and being objective. “Don’t provide advice on your Web site,” he warned. Citing an example from a client’s site, he said it contained a promise that could be risky: “We can review your leases and contracts and determine whether you should be assuming particular risks and how to handle them.”

Brochures and pamphlets can also be misleading and cause problems for agencies. He ad-vised agents to follow the same guidelines for Web sites in using brochures and pamphlets. “Don’t use models and slogans like, ‘we are the best’, or ‘premiere,’ and stay away from words like ‘full’ and ‘comprehensive.'”

Summaries can also pose risks as advertisements, according to Oldenettle. “Coverage summaries of any kind can be dangerous mainly because it is impossible to get everything in. You end up trying to say in two pages what your lawyers can’t say in 60 … I have seen them conflict with a policy, constituting misrepresentation,” he said.

He suggested if you must use a summary be sure to label it as “a brief overview.” The problem with summaries, according to Oldenettle, is that they give clients reasons not to read their policy. “You know who else doesn’t read their policies? Juries.”

He said the only people that actually do read policies are plaintiffs’ lawyers. “People figure there is no reason to read the policy if there is a summary,” he added.