You should be aware of your obligations under the Indemnity Plan with respect to reporting claims.
Occasionally, by the time a licensee reports a claim to E&O, they’ve already admitted that they are at fault and possibly even assured the claimant that they need not worry as their insurer will pay for any error. Once in a while, a licensee may have even gone so far as to agree to the amount of damages suffered by the claimant!
You should never make admissions like this without first having received legal advice, as they touch on matters for which you are not qualified to offer opinions.
Such admissions, though you may make them with the best of intentions, may result in you losing your insurance coverage. Although you may feel responsible for the problem, you may not be responsible at law.
Not every mistake by a licensee means that licensee is found liable in court. Not every mistake by a licensee means the claimant has suffered damages or that the mistake caused those damages. These are all defences that we may raise on your behalf.
If you’ve already admitted fault by the time you report the matter to E&O, you may have prejudiced our ability to defend the claim.
The Indemnity Plan Part IV: Conditions, paragraphs 4.3 states the following:
PART IV: CONDITIONS
4. ASSISTANCE AND COOPERATION
4.3 You will not, except at your own cost, admit liability, make any payment, settle a claim or potential claim, assume any obligation, directly or indirectly assist in making or proving a claim against you, agree to arbitration or any similar means of resolution of any dispute, waive any rights or incur claims expenses without our prior written consent.
It’s best not to delay in reporting problems to us. If someone says that they are going to make a claim against you or if you think you’ve made a mistake, report to us without delay. The staff lawyers at E&O have many years of experience in handling problems like yours and can assist you.
It costs you nothing to report the matter, and sometimes we can make the problem go away entirely, but we need the chance to do so. This opportunity could be lost if you delay in reporting the matter to us.
The first step in reporting a claim or potential claim is to talk to your managing broker. When a dispute with a client or customer develops that isn’t easily addressed, you should advise that person to get legal advice. Your managing broker will help you decide if you should report the matter to E&O.
Licensees should note they have separate and different reporting obligations to the BCFSA. E&O does not provide coverage or advice relating to BCFSA complaints or how claims and claims reporting could affect an BCFSA process, so you may wish to retain your own counsel to assist you in that regard.
Remember, it’s always best to address a claim or complaint, and never a good idea to ignore it.