Understanding E&O Insurance

Table of Contents:

Chapter 1: Liability Dangers	1
Public Awareness:	1
Classified as a professional	1
Malpractice Insurance Policies	4
Standard of Care	5
Torts	6
Chapter 2: General Liability	8
Industry Variety	8
Insurance Agents	8
Insurance Agents’ Professional Negligence	9
Insurance Agents’ Presumed Negligence	10
Insurance Agents’ Contributory Negligence	10
Insurance Agents’ Imputed Negligence	11
Insurance Agents’ Negligence in Tort Liability	11
Express Authority & Ostensible Authority	15
Torts & the Basis for Liability Claims	16
Torts & Contracts	16
Liability Under Torts	16
Insurance Agents’ Civil & Criminal Violations	17
Property, Life and Casualty Fraud	18
Premium Diversion	18
Example #1, #2, #3	19
Fee Churning	20
Asset Diversion	20
Types of Fraud	20
Insurance Company Fraud	21
Insurance Agent’s Breach of Contract	22
Breach of Contract Theory	23
Legally Binding Insurance Contract	23
Relevance	23
A Contract of Adhesion	24
Accountant’s Liabilities	24
When Are Accountant’s Not Liable to Third Parties?	25
Accountant Negligence	26
Accountant Breach of Contract	27
Accountants’ Civil & Criminal Violations	27
Investment Advisor’s Liabilities	28
Stockbroker’s Liability	29
Stockbroker Negligence	30
Stockbroker Breach of Contract	31
Chapter 3: Preventive Measures	32
Public Harm	32
Triggers	32
Financial Planning in the Real World (risk)	35
The Degree of Risk	37
Inflation	37
Likelihood of Loss	39
Degree of Loss	39
Risk Classifications	40
Who Should Carry the Burden of Risk?	41
What Type of Documentation?	43
Claiming Unearned Education or Experience	43
Full Disclosure	44
Release of Liability Form	44
Checklists	46
What Is Due Diligence?	46
Fiduciary Duties	47
Free Errors and Omission Coverage	48
Do All Insurance Companies Require E&O Insurance?	50
Chapter 4: The Policy	51
By Any Other Name . . .	51
Claims-made & Occurrence policies	52
Insurance Agents	53
Financial Planners	51
Trigger Language	54
Retroactive Dates	56
Full Prior Acts	57
Defining the Time of Loss	58
Changing Retroactive Dates	58
Extended Reporting Periods/Tail Insurance	59
Aggregate	61
Legal Defense Cost Provisions	62
Insurance Council of Saskatchewan Requirements for Errors and Omissions Insurance E&O	66
Sample Policy	1-12
Chapter 5: Professional Ethics	69
The Definition of Ethics	69
Example	70
What is Disclosure Obligation?	76
What is Conflict of Interest Obligation?	79
What is Documentation Obligation?	81
What are Ethics?	83
Eliminating Discrimination	84
Who Determines Ethics?	85
Ethical Decisions	86
Promoting Ethical Behavior	87
Egoism versus Egotism	88
Example:	92
What Are Our Responsibilities to Other Moral Persons?	94
Laying Out Policy Benefits and Limitations	95
Policy Replacement	97
When the Agent Allows Misconceptions	98
Obtaining Proper Signatures from the Client	100
Keeping in Touch after the Sale	100
Commingling Funds	101
Following Regulations	102
Competency	103
Financial Strength of an Insurer	104
Diversity, Inclusion and Anti-Bias	109
Discrimination – Redlining	109
Reverse Redlining	110
Reducing Bias in Business	113
Implicit Bias Versus Explicit Bias	113
Effects of Biases in the Workplace	113
Implicit Bias	114
Explicit Bias	115
Institutionalized Bias	115
Even AI Can Promote Bias	116
In Closing	116

United Insurance Educators, Inc.

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Eatonville, WA  98328

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