The collapse of the real estate market and the high incidence of foreclosures has created a new service offered by many real estate agents and brokers; Receivership Services. It may seem like a natural extension of real estate services, but when it comes to your errors and omissions insurance policy that may be a different story as such services are often not covered by your current E&O policy.
Receivership Services and E&O
August 3rd, 2009Internet Security: Has your agency’s E&O policy kept up with today’s exposures?
June 24th, 2009Breach of Privacy and Breach of Security coverage provides protection for wrongful acts or claims resulting from unauthorized disclosure of personal and confidential information either as a result of your actions or the actions of another, such as a hacker. Most insurance agents and brokers E&O policies have not been updated to reflect the modern day exposures of conducting business electronically and fail to adequately cover such exposures.
Errors and Omissions: What you need to know about “Tail Coverage”
June 5th, 2009“Tail Coverage” for insurance agency E&O is simply the jargon for the Extended Reporting Coverage (ERP) feature usually found in a claims made policy. It allows you to cover E&O risks, after the E&O policy has expired, for claims that may arise down the road. It is not extending your policy period, but simply giving you more time to report an incident or claim to the carrier for professional services provided subsequent to the retroactive date listed in the policy and prior to the expiration date of the policy. Many policies only give you the right to purchase such coverage in the event the insurance company cancels your policy. Without this coverage, you are self insuring; the legal defense cost and damages are on your own dime. Make sure that your policy has a bilateral tail; meaning that you can use this option whether you cancel or the carrier cancels your policy for reasons other than default. If you retire, buy or sell an agency, or simply wind down your operation, this becomes an important policy feature.
Commercial Real Estate Claims Due to Foreclosure
May 26th, 2009We are seeing an increase in the number of commercial real estate E&O claims due to foreclosure or business failure. Due to the economy many shopping centers are experiencing a loss of tenants. As businesses in these shopping centers go under, their is loss of traffic within the shopping center which affects all the other businesses.
Real Estate E&O Claims on the Rise
March 5th, 2009In July of 2007 I wrote an article about the rise of E&O claims related to the Real Estate industry. We are still seeing an increase in reported E&O claims. There are a number of factors contributing to this trend, including:
1. Collapse of the Sub Prime market.
2. An increase in the stock market as investment dollars shift from real estate to equity investments.
3. Increase in interest rates.
4. Increase in foreclosure rates, both personal and corporate.
5. Stall of the residential real estate sales in major U.S. markets.
6. A slow down in the growth of increased rents.
Owned Property Issues for Commercial Real Estate
March 5th, 2009Many of our larger commercial real estate clients are involved in businesses other than their primary real estate brokerage. Often our commercial real estate clients will create one company for property management, one for real estate sales and leasing and then also multiple joint ventures and partnerships which own real estate or interests in real estate. Several insurance related issues occur in this situation. I have addressed some of them below:
Subprime Market Issues Affect Insurance
March 5th, 2009The current mortgage meltdown and foreclosure issues affect more than just the housing market. Foreclosures are at an all time high, in many markets real estate values are on decline and E&O claims are on the rise. These circumstances have an adverse affect on the Property & Casualty Insurance market as well as the coverage and pricing offered.
Failure to Remit Premium
March 4th, 2009An insurance agent E&O claim that is becoming more common, relates to a an accounting error where the agent collected a deposit or premium and inadvertently failed to send it to the insurance carrier. Most insurance agent’s E&O policies contain an exclusion for claims relating to such an error. Exclusions may include remitting premiums, return premiums, commissions, brokerage fees or tax monies. Accounting mistakes happen. The wrong policy could leave you unprotected.
Bodily Injury/Property Damage Exclusions
March 4th, 2009Most Insurance Agents E&O policies contain some type of exclusion for bodily injury and property damage claims. Insurance agents and brokers typically do not expect their E&O policy to cover claims for bodily injury and property damage (BI/PD), however, they do expect their E&O policy to cover claims for wrongful acts in placing or failing to place insurance policies on behalf of their clients.
The language found in your E&O policy’s bodily injury and property damage (BI/PD) exclusion may determine whether your E&O claim is paid or denied. Many E&O policies contain an exclusion such as the following:
E&O Insolvency Issues for Insurance Agents
February 24th, 2009Given the recent trends in the financial market and the number of insurance carriers that are under financial review, now is a good time to look into the insolvency provisions within your E&O policy. Most insurance agents E&O policies provide some level of coverage for claims relating to the insolvency of their client’s carriers. However, the specific provisions, such as the carrier must be rated “A-” or “B+” or better by AM Best at the time of placement, may very. Most agencies would welcome this type of enhancement, but be aware, there are also other provisions which may constrict the amount of insolvency coverage you really have. Below are a few examples: