When Carole King wrote the lyrics to “You’ve Got a Friend,” she probably wasn’t thinking about an insurance agent or broker who is concerned about a possible claim by a client.

Worrying is one of the least productive things that we do, after its initial call to action has worn off and it morphs into a dull, recurring dread of a misfortune that may never occur. There are some worrisome moments in an insurance professional’s career:

  • The client who, mid-term and out of the blue, requests a copy of her file.

  • The subpoena to give a deposition in a lawsuit between the client and the insurer on a policy the broker placed.

  • The long-time client and occasional tennis buddy who, after reporting a loss, stops returning phone calls.

Being concerned when events such as these happen is healthier than ignoring them, but a better option is to take action. What can an agent or broker do to manage these situations? King’s suggestion is apt: All you’ve got to do is call.

Talking with a mentor or trusted advisor can help, but there is a downside: If the worst happens and you are sued, you’ve turned that person into a witness.

The plaintiff’s attorney asks you, “When you heard that the insurer had denied coverage for your client’s claim, did that cause you concern?” “Somewhat,” you reply. “Did you discuss your concern with anyone?” “I talked it over with Angela, my former boss at another brokerage firm.”

Later, the attorney takes Angela’s deposition and asks what you said. She won’t lie. “He said that he was worried that he’d get sued because there was a exclusion in the policy that he hadn’t noticed.”

Many professional liability insurers provide free or nearly free advice services to their policyholders, similar to the customer support phone lines or chat rooms that technology companies provide. These “help lines,” as they are sometimes called, are usually staffed by experienced claims professionals or by outside defense attorneys who represent agents and brokers.

Note that not all such help lines create an attorney-client relationship between the caller and the adviser, and it’s best to ask, “Is our conversation protected by the attorney-client privilege?” If the response is “No,” you can still receive valuable, practical advice about how to manage the worrisome situation, but keep in mind that the help line is not a confessional.

I have answered help-line calls for several insurers for most of my career, and have designed some online versions in which the conversations take place through a secure e-mail portal. The questions are usually very specific, but I can group them into a few common types, as follows.

Is this a claim that I have to report to my insurer?

Agents and brokers often call to ask whether they need to notify their own errors and omissions (E&O) insurers after receiving upsetting messages from customers (“Why did you recommend that carrier? They’re dragging their feet on my claim!” “We’ve been friends for years, Jim, but I swear if that insurer doesn’t pay me in full I’ll sue you!”).

As a help-line responder, an outside attorney can’t make decisions for the E&O carrier as to coverage under its policy — that’s the claims department’s role — but we can give practical advice. If the policyholder is making a present demand for money or services from the broker, it’s most likely a “claim,” and should be reported right away. I say “most likely” because not all E&O policies define the term “claim” the same way.

Let’s say it is a claim. In addition to giving notice to the E&O carrier by whatever method the E&O policy requires, what should agents or brokers do? It’s important to be circumspect in discussing the claim with others, and to remember that such statements may later come back to haunt you. There’s a big difference between telling a close friend, “I’m bummed out because Cecil made a claim against me,” and “I made a big mistake, and Cecil made a claim against me.” The second version may be treated as an admission, which makes the other side’s case much easier.

Another good piece of advice: Save all the paperwork, e-mails, notes, calendar and customer relations management system entries, and other items that you have about this client. If you don’t preserve them, the court may treat their absence as an indication that they were damaging to your defense. Keep them in their usual order and don’t “pretty them up” — this helps make them admissible as evidence because they have been maintained in the usual course of your business.

Related: Where does client dissatisfaction become an E&O claim?

If the client’s kvetching isn’t a claim, it may still be best to report it to the E&O carrier. E&O policies usually only cover “claims made and reported” during the policy year. Reporting a potential claim can pin it to the policy year when the notice was given, so if the actual claim is made later it will still be covered by that policy. This might impact your premium the following year, but the impact will be a lot less than not having coverage for an E&O claim.

Legal complaint

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I was served with a subpoena. What should I do?

By calling the help line, you’ve already taken the most urgent step. Subpoenas seeking access to your documents and to take your deposition are ticking time bombs—the time to object to them can be just a few days. Many E&O policies provide coverage for a carrier-appointed lawyer to assist in responding to a subpoena by making timely objections, helping determine what needs to be copied and representing agents and brokers at their depositions.

If there’s a subpoena, there’s already a lawsuit, and the subpoena should be viewed as your invitation to become a defendant. No matter how self-confident an insurance professional may be that his or her work was beyond reproach, the plaintiff’s lawyer’s job is to obtain a recovery from a collectible source. In other words, if the carrier’s coverage defense is strong, your E&O policy has a bull’s eye painted on it. Don’t go it alone—let your E&O carrier and its appointed counsel help you through the legal bramble patch.

My client wants to switch to a new agency or brokerage. What can I do about it?

If you don’t already know the reason for the switch it’s a good idea to simply ask, so long as it’s in a non-accusatory way. There’s no point in burning bridges. If there has been a perceived lack of service, take it as a learning experience. These things happen.

What about your file? Be sure to get a broker-of-record letter from the new broker before releasing the file, and make a copy for your records, especially if there’s a hint that the client thinks something was mishandled in your office.

If your office is part of a larger organization, call the compliance or similar department and follow the organization’s procedures for file transfers, exit interviews and the like.

A broker in my office is leaving and wants to take customers with her. Can I stop her?

Most help lines aren’t designed to address intramural disputes, but when I’m advising clients off the help line here’s what I usually tell them: You can’t handcuff the client to your desk, but you can restrict brokers in your office from taking confidential information with them. Your client list is your trade secret. You can protect it in your employment or independent contractor agreements with brokers in your office. Of course, this can’t be done retroactively, after the proverbial horse is out of the proverbial barn.  

Just as you can’t prevent your client from switching brokers, you can’t prevent a departing broker from earning a livelihood, but this truism is subject to varying state laws and insurance regulations. If you have a noncompete clause in your contract, it may be enforceable in your state, subject to time and scope limitations. This is one of those issues about which we lawyers have to say those two words that clients don’t want to hear, “It depends.” Again, in larger organizations there may be policies in place on this subject.

”The best help line is the one an agent or broker never needs to use, but when issues do arise please check your policy or call your E&O insurer to determine whether a help line is available, and if so, use it. Or, with apologies to Carole King, “You just call out my name, and you know wherever I am, I’ll come running.” Well, not literally, but I or someone like me will be happy to pick up the phone and offer advice.

Louie Castoria is a partner in the law firm of Kaufman Dolowich & Voluck LLP in the firm’s San Francisco office. He is the director of the firm’s West Coast Professional Liability Practice Group. This column does not provide legal advice, and the opinions expressed are the author’s and not necessarily the firm’s or its clients’.

Related: Professional Liability gets crowded

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