PROTECTIVE SAFEGUARDS: A Longstanding Source of E&O Claims

Commercial Property and Businessowners (BOP) policies often contain a protective safeguards endorsement. 

Protective safeguards can include an alarm system, sprinkler system, security service, and a commercial cooking exhaust and extinguishing system. While having these systems in place can result in a discount for clients, they can also result in an uncovered claim if they are not maintained.

There are actions that can help you avoid or mitigate an E&O claim in the event a client has an underinsured claim.

WHY IS THIS A CONCERN FOR YOU?

Clients will often pursue the agent after discovering a claim will not be covered. Frequently, the client will indicate that they provided different information to the agent than what was provided to the carrier. Alternatively, they will claim the agent failed to advise them of the requirements surrounding protective safeguards necessary to avoid a coverage declination.

WHAT SHOULD YOU DO?

• Err on the side of caution. Leave these safeguards off when generating an initial estimate if you don’t have clear information indicating that they are in place.
• Have the client confirm in writing that the safeguards exist. Whether it’s a signed application or simply an email, it’s critical to document it. Did you fill out the application for the client? Have them initial the questions surrounding safeguards in addition to signing the application.  
• When quoting, advise clients to review the provisions surrounding protective safeguards. Tell them to contact you with any questions or concerns. 

If you have any questions about Protective Safeguards, please reach out to E&O Risk Management Specialist Tabitha DeGirolano, RPLU at tabitha.degirolano@uticanational.com. 

This information and any attachments or links are provided solely as an insurance risk management tool. They are derived from information believed to be accurate.  Utica Mutual Insurance Company and the other member insurance companies of the Utica National Insurance Group (“Utica National”) are not providing legal advice or any other professional services. Utica National shall have no liability to any person or entity with respect to any loss or damages alleged to have been caused, directly or indirectly, by the use of the information provided. You are encouraged to consult an attorney or other professional for advice on these issues.