One of the most disturbing events in an agency is receipt of an E&O claim or demand for payment. In some cases the agency knows they made a mistake, but in others they feel justified in having handled the situation to the best of their ability.
Best Practices for Handling an E&O Claim
- Never admit liability to the insured or the insurance company. It’s OK to be empathetic to the situation, but watch what you say.
- Do not discuss the existence of E&O insurance with anyone except your staff and your E&O insurer.
- Complete a claim reporting form and forward, along with any formal demands for damages, to your E&O carrier. Never pay the claim yourself.
- Notify your E&O loss control manager and allow him or her to act as the claim coordinator, gathering all relevant facts.
- Hold a meeting with the individuals involved and ask each person to explain the situation as they understand it. This is not a blame-finding exercise! Focus on the what, how, and when, not the who.
- Have each person write a narrative describing the incident and turn it over to the claims coordinator. Include all relevant conversations and record in chronological order.
- Have the claim coordinator gather or print all relevant information from the client’s file.
- Forward the documentation and narratives to the E&O carrier.
- Only the claim coordinator should have contact with the E&O carrier unless otherwise directed by the carrier.
- At an appropriate time, hold a staff meeting and discuss how the claim occurred and what procedures should be changed in the future to prevent similar incidents.