Stoopid kweschun - E&O in retirement


Super Genius
Would you carry your E&O into retirement? You still have a lot of clients out there you sold a policy to 10, 20, 30 years ago. I'm thinking you should keep your E&O in place?
Yes. At least until the statute of limitations for a lawsuit expires. SOLs vary by state so you would have to look up yours.

I imagine that continuing the coverage would cost less once you are no longer active.
Does SOL run from time of application or claim made? It would seem to be claim made as I have known suits to be filed over years old policies. If that be the case. We need the E&O as long as we have policies still on the books.
Does SOL run from time of application or claim made? It would seem to be claim made as I have known suits to be filed over years old policies. If that be the case. We need the E&O as long as we have policies still on the books.
(caveat, not an agent)

Wow. Excellent point.

I have received one or two lawsuit related policy adjustments over the years. I'm thinking one of them may have been a check. (I can't remember if the check was from a lawsuit or cancelling the policy. The one I have in mind was likely at least 10 years after policy purchase.) I just laughed and ran to the bank thinking I was the minor peripheral beneficiary of legal actions between some "big" policyholder and a "big" insurance company.

Even after being around here for a few years, until I saw your post, it has never occurred to me to think there would also have been an agent wrapped up in that situation with time, mental stress, and legal costs.
When the SOL accrues varies from state to state, as explained in the following article.

It seems that is based on time of loss which in the case of avlife policy would be the death of the insured. Of course if a policy is over two years old, the claim will be paid so there would be no cause of action over that. But that does not been the beneficiary could not bring a claim over the appropiateness of the coverage. In that case the company is out of it and it all falls on the agent. I know of a case where an agent was sued for not reccomending enough coverage.
There are two main types of coverage—claims-made and occurrence E&O policies. Each works differently, and it’s important that your insurance clients understand this difference.

Errors & Omissions Insurance
An errors & omissions policy applies generally to those in professional services, such as law, medicine or finance. However, it has its applications in nearly any business. It covers professional mistakes that lead to financial or physical harm to another party. For example, a doctor who makes errors in treatment might get sued for malpractice. The related legal costs and settlements are commonly covered by malpractice insurance, which is a type of E&O policy.

However, where differences in policies might arise is whether a client’s existing policy can cover a claim. Sometimes, they might have to look to an old policy for coverage, and that might make a difference in whether they can actually qualify for coverage at all.

Claims-Made Policies
A claims-made policy covers you only as long as it remains in force and active. Therefore, that means the insured can’t cancel this policy and expect it to provide coverage later. The policy must have been active when the incident occurred, and it must still be active when an eventual claim arises.

Should a client want to make changes to their coverage, you might advise them to consider buying what’s called tail coverage for the existing claims-made policy. The tail can ensure that, even if the initial policy is no longer active, the client can refer back to it should a claim arise.

Occurrence Policies
Even though it is typically more expensive than a claims-made policy, occurrence coverage eliminates the need for tail policies. Occurrence policies cover events that occurred during their active terms, but even once the term expires, the policy is still good.

So, if a policy was active from January 1, 2018 – December 31, 2018, and a mistake occurred on any given date between those, the insured can file a claim on the policy. Even though a claim might not arise until 2019 or 2020, they can still file against your 2018 policy. Therefore, it’s important to tell clients that this policy can protect them in perhaps more-efficient ways if they plan to remain in business long-term and can afford the additional cost.

Great discussion - you should read your own E&O policy and speak with your agent. [Find out if you have Claims or Occurence] You likely have a claims made policy and might be able to get something called tail coverage.

But - there are lots of nuances to this I would consider, such as: What type of insurance you sell, how long the policies last, is your book being purchased or absorbed by another agency, your net worth, etc.