A client is upset with an error you made, perceived or otherwise. What can you expect?
As soon as you become aware of a statement of claim — or anything that may lead to a claim — you must notify your E&O insurance broker, says Roberta Tasson, vice president, corporate risk, with Toronto-based the Magnes Group Inc. Failure to notify your broker could void your policy entirely, leaving you vulnerable to action from the date the policy started.
You and your broker will have a discussion, during which you will describe the situation and note any documents such as emails, conversation notes and letters.
Your broker will assess and analyze the circumstances and assist you in reporting it to the insurance company.
In many cases, the file simply will be deemed a “circumstance,” a situation that your broker and insurance company will monitor, usually for 90 days. “In most cases,” Tasson says, “these are closed.”
If your case is determined to be a claim, the insurance company will launch an investigation. Depending on the complexity of the claim, you may have to speak to an adjustor and a lawyer, provide necessary paperwork and perhaps go into discovery. The time requirement to settle a claim, Tasson says, can take a serious bite out of your business.
The insurance company then will con-clude the case. A settlement may be made out of court or go to court. Either way, if you have taken the appropriate steps, the case will be closed and, if all goes well, your E&O insurance will cover the incurred costs. —WENDY CUTHBERT