What should I do if I change my E&O insurer?

Changing insurers for your Errors & Omissions (E&O) policy is an important decision that requires careful planning and attention to ensure a smooth transition and continued coverage. Here's a detailed look at the crucial steps to follow and considerations to make when changing E&O insurers:

1. Ensure there is no gap between the two policies :

Carefully plan the transition date between the old and new policies.
Ensure the new policy takes effect immediately after the old one expires.
Avoid even a gap day in coverage, which could leave your business vulnerable.

Importance : Even a brief period without coverage can expose your business to significant risks. Claims can arise at any time, including during a transition between insurers.

2. Check that the new policy includes an appropriate retroactive date :

The retroactive date of the new policy should ideally be the same as that of the old policy.
Negotiate an unlimited retroactive date with the new insurer.
Make sure you understand the implications of any changes to the retroactive date.

Importance : The retroactive date determines how far back in the past your coverage extends. An incorrect retroactive date could leave some past incidents uncovered.

3. Consider "tail" insurance or an extended reporting period with the old insurer :

A "tail" insurance policy extends the period during which you can report claims for incidents that occurred during the validity period of the old policy.
Evaluate the cost and benefits of such an extension, particularly if you change the coverage type (e.g., claims-made to occurrence-based).
Determine the appropriate length of the extended reporting period for your business and applicable limitation periods.

Importance : This option protects against late claims for incidents during the old policy period.

Fully disclose claims history and business activities to the new insurer :

Be completely transparent about your past claim’s history.
Provide full details of your current and planned business activities.
Disclose any known circumstances that could give rise to a future claim.

Importance : Full and honest disclosure is crucial to avoid any risk of the policy being invalidated or contested in the event of a claim.

Additional considerations :

Carefully compare the terms and conditions of both policies to identify any significant differences in coverage.
Review coverage limits and deductibles to ensure they remain relevant to your needs.
Check whether the new insurer offers additional services like risk management or legal assistance.
Consider the change's impact on your customer relations, particularly if specific contracts require notification of a change of insurer.
Keep copies of all your old policies and associated documents, as they may be needed for future claims.

The role of a specialist broker :

Working with a team of specialist brokers, like the one mentioned at Covalen, can be highly beneficial in this process. They can :

Negotiate with insurers to obtain the best possible terms.
Ensure a smooth transition by coordinating with the old and new insurers.
Advise you on the specifics of your industry and best practices in E&O insurance.
Help you understand the nuances of different insurance offerings.
Guide you in preparing the necessary documentation for the new policy.

In conclusion, changing E&O insurers requires careful planning and attention to detail. By following these steps and working with experienced professionals, you can ensure a smooth transition and maintain ongoing protection for your business or professional practice.