Guest Blogger: Hanson Law Firm

Errors and Omission Insurance is a key component for most brokerages. It is equivalent to disaster insurance – and believe me, getting sued can be a disaster.

So, what do you do when your E&O carrier decides to deny your claim for some bogus reason?

Insurance contracts hold a special place in the minds and hearts of the California Courts and Legislature. They are deemed to fill a public need, and are held to a stricter standard of compliance. The thing is, most insureds don’t know that. And many insurance companies (not all mind you) aren’t afraid to take the risks involved in unfairly denying a covered claim.

With all the fancy pants language used by an insurance carrier in its application and in its policy, you’d think the deck was loaded in their favor in the creation of slick ways to get out of covering a claim. Not so buckaroo. The folks writing the laws are on to the carriers. As a result the language in an insurance policy and application is strictly construed against the insurance company, and broadly construed in favor of the insured. Any ambiguity is ruled in favor of the insured. So, when you’re confronted with determining what is is, it’s the broker that gets the benefit.

That’s one part of the equation. What about all those niggly little details that come up when the carrier does insure. You know, like when there is a settlement offer. Sometimes the broker doesn’t want to settle – because it sets a bad precedent or it just feels wrong to do so. Sometimes the broker wants to settle – because not doing so might expose the broker to uninsured liability.

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