ERRORS & OMISSIONS
CLAIMS MADE AND POLLING LETTERS “Polling Letters” are indispensable errors and omissions (E&O) tools of utmost importance. As the name suggests, these letters “poll” the insured’s key employees to inquire whether or not those polled are aware of any incidences that qualify as or may lead to a “claim.” When coverage is written on a claims made basis, situations arise that require their used.
In a “Pure” Claims Made form the “basic” or “automatic” ERP is triggered if or when the policy is cancelled, whether by the insured or the insurance carrier. But when coverage is written on a Claims Made and Reported basis, the ERP is triggered at the end of every policy period – because the “claim” must be reported in the same policy year it is received by the insured.
Coverage written on a “claims made” basis responds to defend and/or pay/indemnify only those “claims” made or filed during the policy period. Any “claim” or “potential claim” known to have been made or received during the policy period but not reported during the policy period or applicable extended reporting may result in severe coverage or limits restrictions or the total denial of coverage.
When liability coverage is provided by one of these claims made forms, polling letters are necessary (not just recommended) when any one of three events occur: 1. When the “basic” or “automatic” extended reporting period is triggered; 2. When there is a reduction in coverage; or 3. When the retroactive date is advanced.
There are two primary “types” of claims made policies: • “Pure” Claims Made; and • Claims Made and Reported A “Pure” Claims made policy responds to claims made during the policy period provided the covered act (wrongful act, error or whatever triggers coverage) occurred after the retroactive date. A Claims Made and Reported form responds only if the “claim” is reported to the carrier in the same policy year the “claim” is received. Both types have extended reporting period (ERP) provisions (“tail” coverage), but the ERPs are triggered at different points in time. 20 | JUNE 2021 |
wisconsin INDEPENDENT AGENT
Triggering the Extended Reporting Period Whether the event triggering the ERP is the cancellation or non-renewal of a “Pure” Claims Made policy or the end of the policy period in a “Claims Made and Reported” policy, the insured must be polled to inquire whether or not there are “claims” that require reporting to the insurance carrier. If a claim that should be filed is not, the insured could be penalized by severe coverage restrictions or the outright denial of coverage. Extended reporting periods allow the insured additional time beyond the end of the policy period to submit a “claim.” Policy language may allow the insured up to an additional 30 or 60 days beyond the expiration of the policy period to submit the “claim.” A “claim” submitted
