Legal Question in Insurance Law in California

Wrongful Insurance Professional Act

Our insurance agency wrote an apartment policy in Oct 2003.

Insurance company had a supplemental questionaire asking the applicant to complete. One of the question was whether there are any rent subsidy tenants in the apartment. Applicant checked yes. The producer told the applicant that checking any yes may cause the company to decline the application. Apparently insured told the producer to change to a ''no''. The producer made the change without requesting an initial from the applicant. The company underwriter accepted the form without questions and thye policy was issued. Since then company had renewed the policy two times. Company inspectors had inspected the building two times and this quesion never came up again.Then came a fire in November of 2005. Company discovered there is a large percentage of these section 8 tenants. Insured was not cooperative and a $300,000 claim quickly jumped to close to $1 million in reserves. Insurance company submits an E & O claim to our agency's e & O carrier for violating company's underwriting guidelines. How likely is this claim going to be successful ?


Asked on 3/22/06, 3:02 am

3 Answers from Attorneys
Jonathan Stein Law Offices of Jonathan G. Stein

Re: Wrongful Insurance Professional Act

Mr. Murray and Mr. Cohen give you great advice. You should find an experienced insurance attorney to review your E&O policy as well as the actions of the insurance company. Time is of the essence in this matter.

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Answered on 3/29/06, 12:10 pm
Steven Murray Steven W. Murray, APC

Re: Wrongful Insurance Professional Act

You need to retain an insurance coverage lawyer immediately. You cannot rely on the insurer's selected defense lawyer to protect you. Do this right away, as there are many loopholes in E&O coverages. I would not say more in a public forum as you should discuss this privately for all parties' protection.

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Answered on 3/28/06, 6:26 pm
Robert F. Cohen Law Office of Robert F. Cohen

Re: Wrongful Insurance Professional Act

Before reading Mr. Murray's response, I was about to write that, because this is such a factually-intensive situation, you should at least consult personally with an attorney and bring in the appropriate documents for review. LawGuru is a terrific device for guidance and sometimes support, but we are not permitted to create an attorney-client relationship by such specific advice.

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Answered on 3/28/06, 8:13 pm


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