E&O Prevention
Strategies for the Professional Agent
January 14, 2016

Agents of America


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AOA News, Views, Tips & More

By Thomas Paschos, Esq. of Thomas Paschos & Associates, P.C

In Thomas DeMarco v. Sean Robert Stoddard, D.P.M., 2015 N.J. LEXIS 1237 (N.J. December 1, 2015), Defendant Sean Robert Stoddard, D.P.M. practiced podiatry in New Jersey. In 2007, he applied to the RIJUA for medical malpractice liability insurance. Among other representations, the application indicated that at least fifty-one percent of Dr. Stoddard's practice was generated in Rhode Island. That answer was false. Dr. Stoddard submitted renewal applications from 2008 through 2011, each of which stated that at least fifty-one percent of Dr. Stoddard's practice was generated in Rhode Island.

By Eric Cheng, Esq. of Wilson Elser

Design and other professionals often incorporate their practices in an effort to avoid individual liability. They also add well-crafted limitations of liability and indemnification clauses in their form services contracts to avoid responsibility for problems that arise in the execution of the plans. These strategies are especially important for practitioners in jurisdictions where a design professional may be exposed to liability disproportionate to the limited scope of services, such as where codefendants have no insurance coverage or are underinsured. It is also common for plaintiffs to sue the professional individually to attempt to circumvent favorable clauses in the professional corporation's standard contract for services.

By Meghan A. Collins, Esq. and Michael A. Hamilton, Esq. of Goldberg Segalla 

The scope of the pollution exclusion in liability policies continues to be a highly-contested insurance coverage issue. One of the more recent debates in this area is whether the pollution exclusion's application is limited to "traditional environmental pollution" or whether the exclusion should be afforded its plain and ordinary meaning, similar to other policy exclusions . The Vermont Supreme Court recently sided with insurers on this issue, holding that a policy's pollution exclusion should be treated with the same analysis as any other policy exclusion. In Whitney v. Vermont Mutual Ins. Co . , the Vermont Supreme Court considered whether the policy's pollution exclusion precluded coverage for an insureds' home that was damaged as a result of spraying a pesticide, chlorpyrifos, to get rid of bed bugs. The Vermont Supreme Court ultimately ruled that "pollution exclusions are not presumed, as a class, to be ambiguous or to be limited in their application to traditional environmental pollution" and, therefore, coverage was precluded.

By Michael Mercer, Ph.D., Mercer Systems, Inc.

Pre-employment tests can help you hire terrific employees when you use custom-tailored benchmark scores for each job in your organization. 


The best way to customize pre-employment tests is to have your company's best, "superstar" employees in each job take the tests.  The typical test scores gotten by your best employees in each job should be the benchmark test scores for that job in your organization.  Doing this is called a benchmarking study or concurrent validity study.

By Marc Zimet, Esq. of Jampol Zimet LLP
The National Association of Insurance Commissioners (NAIC) is taking steps to address cybersecurity risks posing a threat to the insurance industry in the wake of several high-profile cyber security breaches involving client personal data and the continuing threat of future breaches. In response to the risks, on October 14th the NAIC implemented a Cybersecurity Bill of Rights, created by the association's Cybersecurity Task Force.

By Lindsey Dean, Esq. of Tressler LLP

A first layer excess insurance policy was not triggered by a primary insurer's below-limit settlement with a mutual insured, as such settlement did not constitute actual payment of all underlying insurance. Martin Resource Mgt. Corp. v. AXIS Ins. Co., case no. 14-40512, 2015 WL 6166661 (5th Cir. Oct. 21, 2015).

By Jason C. Gavejian, Esq. of Jackson Lewis P. C.

Can we prohibit employees from making audio recordings at work?  As advancements in technology continue to increase, and it becomes easier and easier for employees to surreptitiously record conversations, this inquiry is posed by many employers.  In fact, we discussed this very question back in 2013.  Unfortunately, the answer to this question is perhaps the most often used attorney response  - "Maybe."  This is especially true given the recent decision from the National Labor Relation Board (NLRB) in Whole Foods Market, Inc. and United Food and Commercial Workers, Local 919 and Workers Organizing Committee of Chicago .  For employers, or those looking to prohibit the use of recording devices, the NLRB's decision, issued on December 24, 2015, is more akin to coal than an early Christmas present.  

By Michael L. Zigelman, Esq. Eric B. Stern, Esq. & Alexana Gaspari, Esq. of Kaufman Dolowich & Voluck, LLP

Providing more clarity to New York Insurance Law's notice/prejudice standards in the context of an insured's default in an underlying lawsuit, a recent decision from New York's Southern District states that an insurer's time to disclaim coverage begins to run upon a finding of its insured's default, and, moreover, an insurer has no obligation to try to vacate the default, as such activity may actually result in a waiver of the insurer's right to disclaim.

By Mark Hunter, The Sales Hunter

1. Quit spending time with prospects who don't fit your customer profile.

If you want to be seen as a high-value full-price provider, then you want to attract customers who fit that profile. You want to steer clear of customers who will never fit that profile.

As I like to say, "You can't turn a Walmart shopper into a Nordstrom's customer." Just because a prospect is wiling to talk to you doesn't mean they're a good prospect.

By Denis C. Dice, Esq. of Marshall Dennehey Warner Coleman & Goggin, P.C.
Key Points:
  • Bond suitability and misrepresentation claims are on the horizon.
  • Proper client counseling and disclosure documentation will be critical to defend these claims.

By Nicole E. Jagielski, Esq. and Danielle A. Noble, Esq. of Hinshaw & Culbertson LLP

What can you do when your boss won't listen to you, the Manager/Director of Human Resources?

"Keep complaining," the Ninth Circuit said (not in those words).
Complaints, Complaints, and More Complaints

In Rosenfield v. GlobalTranz Enters., Alla Rosenfield-a sometimes-director, sometimes-manager of Human Resources at GlobalTranz-notified her employer not once, not twice, but at least thirty-five times that the company had violated the Fair Labor Standards Act (FLSA).  Ensuring GlobalTranz complied with the FLSA, however, was not one of her job responsibilities. Whose responsibility was it? Her boss', which is probably why her complaints fell on deaf ears. Eventually though, Rosenfield wore him down, and he agreed to take some action on the conditions that she not attempt to "determine whether the company was actually implementing those changes."

Letter From  the Publisher
Protecting Your Reputation

As every Insurance Agent knows, their most important asset is their reputation, it takes years to build and just one mistake to ruin. Understanding the issues is the first steps in avoiding E&O Claims. AOA has created a three book series dealing with 56 different E&O topics and issues agents face every day. Enter promo code
WPD20 at checkout for an additional 20% discount.

Book One - 
A Comprehensive Guide To Avoiding E & O Claims
Book Two - 
E&O Exposures in the Sales Process

Book Three - 
E & O Exposures By Line of Business

Demotech, Inc.
Since 1985, Demotech, Inc. has served the insurance industry by assigning accurate, reliable and proven Financial Stability RatingsĀ® (FSRs) for Property & Casualty insurers and Title underwriters. FSRs are a leading indicator of financial stability, providing an objective baseline of the future solvency of an insurer.  You can search the most current FSRs  here .
Do You Need Continuing Education?
Complete your entire  State-Required CE Online with WebCE!   AOA has partnered with WebCE, a leading nationwide provider of Continuing Education for insurance professionals to provide you with state-approved self-study CE courses to satisfy your CE requirements online!  Check out your  CE State Requirements.  

Is Your Insurance License Renewing Soon?
Is your agency licensed in multiple states? Does your agency maintain nonresident licenses? Do you know when renewals are due? Did you know a resident change requires address changes in the states in which an individual holds licenses? If you need assistance with any of your licensing needs go to the experts Supportive Insurance Services.

Excess & Surplus Lines Laws
We are happy to provide the 2015 Edition of Locke Lord LLP's Excess and Surplus Lines Law Manual.

This edition reflects all of the pertinent changes in the surplus lines laws and regulations of the 50 states and U.S. territories during the past year. We sincerely trust you will find this manual to be a valuable desk reference and if you have any questions regarding the contents, please contact John P. Dearie, Jr., Esq. Editor and Partner at Locke Lord LLP at jack.dearie@lockelord.com or (212) 912-2737
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