by Mary Salerno, National Accounts Manager
An 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.
A common exclusion found in insurance agent’s E&O policy is as follows:
“This policy will not pay for any claims based upon, arising out of, attributable to, or directly or indirectly resulting from the failure to collect, pay or return premium.”
We believe that an exclusion such as this can be detrimental to an insurance agency even though it is completely unrelated to their competence in placing proper coverage. Bookkeeping errors happen. Don’t let yourself be unprotected.
What can I do?
We believe that insurance agents should not be their own insurance agents. Similar to plaintiffs should not be their own attorneys. We have been very successful in enhancing our client’s policies to provide coverage for this type of exposure. Wording Not Recommended One of our licensed professionals would be happy to review your policy and offer suggestions on how to improve your coverage. We have a few pointers below:
Wording Not Recomended
Wording Recommended if claims relating to premium monies are excluded: