As the COVID-19 outbreak has made its way through the United States, affecting everything from jobs to socializing, those in the insurance industry are preparing for a significant increase in claims volume. Much of the earlier focus related to the pressure on insurers that write business interruption policies. However, it’s now known that many different lines of coverage are likely to see a significant rise in claims, whether directly caused by COVID-19 itself or by social, governmental, or institutional reactions to it.
One particular kind of coverage that is set up to see higher claims is E&O insurance. The potential for E&O claims to see a significant rise is becoming more evident. These policies cover alleged acts or actual acts, errors, misleading statements, neglect, omissions, or breach of duty committed by an agent or broker while providing E&O insurance services. The language around a policy usually offers limited coverage for violations of privacy and network security breaches in the provisions of services.
Here’s a look at some of the anticipated claims that those in the errors and omissions coverage world may see in the coming months.
Potential Claims Facing E&O Insurance
In general, COVID-19-related claims are poised to see a rise under many of the same E&O policy provisions that are commonly a problem in other types of insurance claims. The current economic climate, paired with the political and societal responses to the coronavirus outbreak, has increased the likelihood of many scenarios that may lead to E&O claims.
More specifically, there may be a rise in E&O claims against insurance agents and brokers for failing to procure sufficient business interruption or business income coverage, which usually includes the loss of income but excludes ordinary operating expenses. This kind of insurance coverage applies during the time required to repair or replace damaged property.
In Due Time
Another anticipated E&O claim insurers and brokers are expected to face is failure to provide timely notice of claims under E&O policies where agents and brokers wrongly assumed that there would be no insurance coverage for a coronavirus-related claim. Or, if the insurer guaranteed they would pay claims related to COVID-19 where no coverage currently existed under the policy, they could land themselves in hot water.
Insurers and brokers in the industry may also expect to see E&O cases related to filing claims on behalf of clients for COVID-19 losses that don’t qualify for insurance coverage, or that are excluded under their E&O policies, without having their clients review the loss forms before claim submission.
Network Security Issues
Another type of claim that is expected to surge is network and cybersecurity suits. Since most people have shifted their work from an office to their home since March, there’s been more reliance on their personal Wi-Fi connection, without implementing the best practices for proper protection while working online. There may be a rise in claims due to this new reality, including insurance agents and staff across the U.S. If a client is now working remotely and did not get the right level of coverage, an insurance agent could end up facing an E&O claim. Agencies and brokerages need to be sure to review their business interruption, EPLI, and workers’ compensation.
An E&O insurance company has the duty to defend its client. However, if a business lacks sufficient coverage, it can cost the business a significant amount to financially recover and protect its reputation. Similarly, if the insurer failed to suggest appropriate coverage limits for the business, they could be on the hook with their own claims.
With the full scope of the aftermath of COVID-19 still uncertain, having sufficient E&O coverage is becoming increasingly important.
About Genesee General
At Genesee, we strive to provide quality insurance solutions for the Commercial E & S sector, and we can help with your small, middle market and large excess and umbrella accounts. Our longstanding expertise has allowed us to successfully serve your clients for over three decades. Our specialized products include coverages for Transportation, Garage, P & C, Professional, Brokerage Property, Specialty Programs and many more. For more information about our products, we invite you to contact us today at (800) 282-8755.