8 Best Practices to Help Your Agency Avoid E&O Claims involving Umbrella Coverage

E&O claims involving Umbrella Coverage happen often. Allegations include failure to place, failure to suggest, exclusions in the Umbrella form the client was unaware of, and frequently, coverage gaps where the underlying limit was not at the required level. 

The following best practices could help you avoid these claims:

1. Have a common effective date between the underlying coverages and the Umbrella.
2. Be knowledgeable about the underlying limit requirements and verify those limits are in place. The required limits can change so make sure to review this regularly.
3. Review all of the coverages that can be scheduled with the client. If some of the policies are not written with your agency, advise the client in writing what the requirement is. Secure a dec page for those policies. Advise the client that if any of the limits of the underlying coverages change, they must notify your agency – and failure to notify you could impact the available coverage if there’s a loss. 
4. If possible, don’t write just the Umbrella Coverage. It’s better to start by writing the underlying coverages rather than starting with the Umbrella policy.
5. Do not recommend specific limits. Doing so will give the client the impression that the limit will be adequate to address any claims. Offer multiple limit options and have the client indicate which limits they believe are sufficient to meet their needs.
6. Ensure that all underlying claims are reported to the Umbrella carrier.
7. Advise the client in writing that no coverage has been bound if they indicate they may be interested in purchasing the Umbrella at a later date.
8. Have the client reject the coverage in writing and document it in your file if they decline to purchase the Umbrella.