ON THE SURFACE, there is a simple explanation for all insurance agents' errors and omissions claims: The claimant wants insurance to cover a loss and blames the agent because it doesn't. The underlying causes, however, are more complex.
Insurance agents today are facing greater scrutiny. Two recent court cases are likely to have a major impact on agent E&O claims. They involve different coverages and different agent duties, but they point to a single conclusion: That the responsibility of insurance agents may be expanding.
This spring, the California Supreme Court refused to review an unusual case that now stands as a potential precedent for other E&O claims. A U.S. business contacted a retail broker to procure E&O insurance for a software company based in India. The software company needed the insurance to satisfy a condition in its contract with the business. A retail agent placed the policy through a wholesale broker.
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