The main premises of an agentaEUR(TM)s E&O policy is built on the concept of legal liability aEUR" in other words, the agency must be found to be legally liable for the policy to pay.
In most, if not all states, an insurance producer has a common law duty to obtain the coverage that the client specifically requests within a reasonable time or to otherwise inform the client that you are not able to do so. It is thus extremely important to listen to the request from the customer. Your duty as the agent or broker is defined by the nature of the request so listen carefully to any specifics that the client is requesting.
Absent a specific request for coverage, the producer should not be liable for failure to procure a particular type or amount of coverage.
A producer owes the client a duty of reasonable care and diligence, but absent a specific request for coverage not already in the clientaEUR(TM)s policy or the existence of a special relationship with the client, the agent/broker should have no continuing duty to advise, guide or direct a client to obtain additional coverage. This could change if it is found that the agent had a special relationship with this specific client.
While a producer owes a duty of reasonable care, an agent/broker in the basic relationship with the customer should not be held liable for failing to provide unsolicited advice after coverage is obtained regarding a clientaEUR(TM)s ever-changing insurance needs.
In many states, the concept of special relationship is being introduced and while it is still somewhat an untested concept, that this could be applied in cases where warranted. If certain exceptional or particularized situations arise, by conduct or by express or implied contract with a client, there is the potential for the concept of aEURoespecial relationshipaEUR? to be applied (these are in addition to those fixed at common lawaEUR?).
With that being said, in most states, the insured has a duty to read and understand their policy. In numerous E&O cases, this has proven to be a key issue in the defense of your agency. Ignorance or failure of the insured to read their policy will not relieve them of their obligations. To reinforce this duty, it is highly recommended that when an agency sends the policy to the insured, they should include a generic cover letter that requests / urges them to read their policy and if they have any questions, to immediately contact the agency.
The insured is required to provide truthful and accurate information in the insurance application and should personally sign the application