How to Respond to an E & O Claim

After you’ve been in business for any time at all, someone will accuse you of dropping the ball and doing something or not doing something that caused them a financial loss.

Do not panic. If a client calls, emails, texts, or sends a letter through snail mail making such a complaint. Recognize the communication for what it is – the beginning of an Errors and Omissions claim. Your unhappy client may not use the words “errors and omissions,” “E & O” or “professional liability,” but it is important you take the matter seriously.

Step 1: Do Not Respond to an E & O Claim in Anger

The same holds true if a client files a complaint with your state Department of Insurance or skips regulatory authorities altogether and sues you in court for alleged breach of duty. Under any of these scenarios the first step must be to notify your E & O carrier, even if you think the claim is bogus.

The absolutely worst things you can do are to ignore the matter or respond yourself without involving your professional liability carrier.

An accusation or formal claim doesn’t mean you did anything wrong. You may feel attacked, misunderstood or angry, but responding in the heat of moment makes your E & O carrier’s job more difficult and can jeopardize your defense.

Do not:

• Say anything such as, “No problem. That’s why I have E & O coverage.”
• Turn over any documents or parts of the customer’s file without consulting an attorney.
• Send an email or letter that argues your side or questions the sanity, ethics or moral character of your client or anyone representing your client.
• Respond with detailed information in an attempt to defend yourself.
• Talk to the client’s attorney or investigator without representation of your own.

So what does that leave?

Step 2: Contact Your Errors and Omissions Carrier – STAT

If the news come via a phone call, respond politely and professionally. Make sure you have the client’s name and the know policy in question.

Immediately contact the insurance carrier of your professional liability policy. Follow the representative’s instructions with respect to forwarding client communications and documents.

Do not stall on notification. In some cases, for example, a complaint to a state Department of Insurance requires a response within 10 days.

Instruct your staff members to refer any calls from the client, the client’s attorney or third parties to refer the matter to your Errors and Omissions carrier.

Follow your carrier’s instructions on whether to hire an attorney or work with the attorney the insurance company provides.

Put your nervous energy to work compiling a detailed chronology of events as you pull together all documentation relating to the claim, from call logs, to meeting notes, policy changes, endorsement and waivers. Never destroy any records.

Step 3: Don’t Panic

And don’t forget to breathe. Leave the heavy lifting to your professional liability carrier and legal counsel. That’s why you have E&O coverage.