Risk Management

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Date that E&O coverage is put in place for the first time. Coverage must be continuous. N/A or Full Prior Acts is the best possible. If a policy lapses, they lose their prior acts coverage and have to start over.

The insurance company submits their policy and premiums to the State for approval. They cannot deviate from those coverages and/or premiums so all companies that fit that mold will be paying essentially the same premium.

Totally legal to do business in the State, but they do not file their policy or premiums with the State. This gives the Underwriter more flexibility with coverage and premium so they can charge whatever they want (lower or higher). Negatives for client are they have to pay surplus lines taxes and fees above and beyond their premium and IF the carrier goes out of business while they are representing you in a claim, the State WILL NOT step in and help you. You are on your own.

It is a rating company that measures the financial stability of insurance carriers. The insurance carriers actually pay this company to rate them. Ratings start a A++ which is the very best and go down to D. We only deal with A, A+ or A++ rated carriers. Depending on the circumstances, we may use an A- company from time to time, but that is not the norm and we would explain to the client the ramifications when we quote them.

These are required to bind coverage if the request to bind comes in after their expiration date of the policy. The carrier just wants to make sure that your intentions were not to bind coverage again and then a claim arises so they want to bind right away. It is protection for the carrier that they are not just buying a claim.

Show if and what kind of claims have been filed against the client/prospect. It shows total payout, payout to Attorneys, payout for settlement costs, whether the claim is still open or has been closed, dates of claim, claimants names and a brief synopsis of what the claim was all about. If there have not been any claims, the loss runs would show that as well.

ALL carriers (except CNA) require 5 years of loss runs if they are a large company OR if they have any claims at all. CNA requires 6 years or loss runs. Sometimes prospects/clients will say that they have had only 1 claim so why do we need a full 5 years? It is just for verification that there have not been any others.

This means that both Attorney fees and settlement fees erode your limit of liability. If you have a $1,000,000 policy and you have to pay out $100,000 in Attorney fees, you only have $900,000 left for that policy year to pay settlement costs.

This means that Attorneys are still paid as normal, but ONLY settlement costs erode your limits of liability. So if you pay $100,000 in Attorney fees with a $1,000,000 limit, you would still have the full $1,000,000 to pay for settlement fees.

With first dollar defense, if a claim arises and the Attorney makes it go away without settlement costs OR if you go to court and are found not guilty, your deductible would be waived in full. In all other circumstances, you would have to pay your deductible.

When you have a deductible, it means that if a claim arises, you would pay the first amount (whatever your deductible is) and the insurance carrier would pay after that point.

With a retention, if a claim arises, you would hire your own Attorney and handle it yourself until the retention amount is met and they you turn it into the insurance carrier to continue representing you.

An endorsement changes a policy for better or worse. IF someone changes their address, instead of writing up a whole new policy, they will type up a 1 page endorsement with the address change that then becomes part of the policy. The same goes with additional insureds, change of limits or deductibles if the client requests, etc.

With an additional insured, they control the policy as much as the Broker does. They have every right to make any changes or even cancel the policy. Also, if you have an additional insured on your policy, they are afforded coverage so their legal fees, settlement costs, etc will be paid by your policy.

They do not have any rights at all. The only benefit that they receive is that they are notified if the policy is cancelled or lapses for any reason.

The policy includes what they will pay as well as what they will not pay. You almost have to be a lawyer to read a policy as they may take away a benefit on one page and then put it back in 10 pages later. Applications become a part of all policies.

Dec page includes limits, deductibles, name of the company (legal and dba), insurance carrier information, prior acts or retroactive date, policy dates (insured from and to), etc. This is the page that most companies need as proof of coverage.

with claims-made policies (E&O), it does not matter who is insuring you when a transaction takes place, it matters who is insuring you when a claim is first brought to your attention. IF you are switching E&O providers, make sure they include prior acts coverage and if a claim arises from the past, the new carrier will address it. The old carrier is off the hook. This is opposite of an occurrence policy where it does not matter who is insuring you now, it matters who was insuring you when the situation arises. Auto, Homeowners, etc are occurrence policies.

If you add agents into your office mid-term, they will be added without any additional premium. There is no need to inform the insurance company UNLESS you are in a mandatory State. In that case, you will want to let the carrier know so they can create proof of coverage for you.

if you are purchasing an existing office to put on your policy, let the carrier know. They will want to know how much income you expect the new office to generate for you, if they have had any claims, etc. Normally, there will be additional premium required to add the office to your policy.staff that is injured while on the job. Worker’s compensation protects you from the costs associated with any worker’s comp claims or requirements.

if you are opening a new office, let the carrier know that so they can give you proof of coverage. This will not affect your premium as there is not a track record as of yet. If you are a franchise, they will want proof that the office is included on your policy. Coverage is not affected by the number of offices you have but by the gross income, loss ratio, mix of business, etc.