I want to wish everyone a Merry Christmas, Happy Hannukah and just a general prayer for you, your staff and your families for a wonderful holiday and a better, prosperous 2026.
Growing up I was lucky to celebrate both Hanukkah, (my family), and Christmas, (our neighbors the “Scotts", who had no children and thus treated my sisters and I as their own). Thus, I came away with the understanding that this time of year is a great time to take a deep breath, take stock of everything and reassess.
I have always been moved by the speech Bill Murray gives in the end of the movie SCROOGED, when he has his epiphany of what the holiday, at its best means, To paraphrase ….this time of year is “when we all act a little nicer, we smile a little easier, we... we cheer a little more. * * * out of the whole year, we are the people that we always hoped we would be".
I think like most of us, I get a bit retrospective this time of year even with the flurry of holiday stress and activities. Retrospection is a wonderful thing when it comes to E&O prevention and mitigation.
Over the past year I have provided you with various articles, advice and guidance as to E&O issues. Some with, (I know), mind numbing minutia and detail. So I thought a check list of Naughty & Nice….in the spirit of the season… would be a perfect way to close the year.
1. “Paper" Your File - Generally
I put “paper" in quotes as I know that we are in the digital world. That is both a blessing and a curse these days. Digital management systems may be a god-send for the efficient operation of your business but they are becoming a nightmare when I ask a client for their full file for an insured who is now suing them on an E&O claim. Saving documents and being able to (1) easily retrieve them and (2) make sense of them years later are two different things. This applies to litigation in which you are a party and non-party subpoenas.
In order for your E&O attorney to understand what happened in any procurement, we must use your documents to go back in time and retrace every step. From the first moment the customer walks in the door, to them filling out an application, etc. etc., policy issuance, renewals, and so on. The Chronology of Events is the DNA of every E&O claim and that is always and only based on the documents.
Make sure they are saved at every step in the procurement /servicing timeline and done so in a way that will make sense years later and can be retrieved.
2. “Paper" Your File - Specifically
- You MUST always have signed everything: Proposals, Quotes, Applications, Renewals, etc. Given current technology there is no reason not to.
- Relatedly but more a “custom" fix…. is that you must document every time you suggest higher limits or more coverage and it is REJECTED. Given that AFTER an uninsured loss every insured will lie and say that if it was offered they would have directed the broker to procure said coverage… “No matter the premium increase", the only defense we have to that is proof that in the past, the Insured rejected suggestions for coverages with higher premiums.
- Most important is proof of policy transmittal to the Insured. The Duty-to-Read is still the greatest defense to any E&O claim. Proof that the insured got the policy at or near the time of issuance, (renewals too), cannot be overstated as a defense. Transmittal by email to an address that you know is the insured and that works with a statement that says something to the effect: “Here is your policy as your requested. Read it carefully and advise us if it you need or want any changes including coverages or limits."
3. Business Puffery and Sales Pitches
While I appreciate as business owners the competition and need to entice customers to your agency rather than a competitor, using language more suitable to a President's Day Mattress Sale on your Website or in any marketing material will come back to hurt you…significantly.
DO NOT use any words or language to suggest “Expertise", “Specialization", or what you will do for the insured that is outside what a broker does. Do not forget that the internet is FOREVER, and with the use of the “Internet Archive" a Plaintiff's lawyer can find your website from years ago and use that marketing language in against you. (
https://archive.org)
Two weeks ago a Judge in my Failure to Procure E&O case in a New England state issued a decision granting us summary judgement dismissing EVERY cause of action against the Broker but Negligence. So now we are going to trial on that sole cause of action. The reason that the court did not dismiss the Negligence claim was because the Insured's lawyer attached all the emails and marketing material that my client sent to the “prospective customer" (trying to get their business) which said things like: “I will review all your coverages and limits each and every year" and “I have expertise and know ski resort condominium coverages" and “I have calculated your Replacement cost based on square footage and your limits are sufficient." When there was not enough Code Compliance limits after a total fire loss, the broker was sued. Those emails and other such statements were a weight around our necks we could not shake or explain away. The Court even found that they supported a Special Relationship.
4. When in Doubt Seek Help
The BIG I is your single greatest resource for getting guidance BEFORE something happens that requires my and your E&O carrier's involvement. Utilize it.
In this instance I define the “BIG I" as including me and my lawyers. I am always here for you, no matter what the issue. If we do not immediately know the answer, we will research it ad give you our best advice as to how to address whatever scenario you have.
5. Take Notices / Threats of Litigation and Claims Seriously
Whether a subpoena or a letter / email of a possible claim, DO NOT ignore it or think it is going away. It is not. Delay prevents the possible early resolution of something before it becomes something-more.
Subpoenas are often the Canary-in-the-Coal Mine. Do not respond without E&O counsel's involvement. (Many E&O policies now treat service of a subpoena as a “Claim" / Notice triggering event.) Most of the subpoenas I see are being used in the underlying action for no reason other than to gather information and documents for the eventual E&O case….which is improper and easily negated.
6. Do Not Fall-On-Your-Sword
We all make mistakes. That is the human condition. It is of course commendable to admit such mistakes. BUT NOT WHEN there is a potential E&O claim. Possible negation of your E&O coverage aside, such statements are legal admissions of wrongdoing and will be used against you in the litigation.
Never admit to any wrongdoing to an insured or anyone with regard to any scenario….especially in writing. And that applies INTERNALLY in your agency. All internal communications and documents are “Discoverable"….meaning that will have to be produced in litigation.
Understand that being “Wrong" and being “Legally Responsible" a/k/a Liable are two entirely different things. I have gotten many cases against my clients dismissed even when they absolutely committed an error and omission based on any number of legal doctrines, principals and or technicalities. But imagine how hard it will be for a judge to dismiss a case against a broker based on such nuanced legal technicalities when the opposing papers to dismissal attaches an email from you that admits to the wrongdoing.
CONCLUSION
Like Santa's list, the above can go on for many more entries. But based on another year of litigation of E&O claims, these are the top of my list of DOs and DONTs.
I close with these lyrics from one of my favorite Christmas songs. 1992's “The Closing of the Year" by Wendy & Lisa.
“If I cannot bring you comfort, then at least I bring you hope.
For nothing is more precious, than the time we have and so.
We all must learn from small misfortune, count the blessings that are real.
Let the bells ring out for Christmas, at the closing of the year."
Stay well. Be safe. Enjoy.
Very truly yours,
Howard S. Kronberg, Esq.
Kaufman Dolowich, LLP