E&O Carriers…those folks to whom you pay hard earned dollars, “just in case.”
What a crock. If there is any possible way to get out of defending a broker or agent, they’ll find it. And they are sneaky about it.
Just this week, a broker was sued, named as one of nearly a dozen defendants in one of those foreclosure “you shouldn’t have given me the loan in the first place” cases.
The broker tendered it to the E&O carrier, who picked a lawyer for the broker – and that lawyer never did a thing. I mean – NOTHING. Weeks went by, and the broker contacted the carrier again – asking if there was going to be coverage…
“Sure” said the Carrier. Who assigned a new lawyer. But nearly 60 days had already gone by. And the complaint needed to be answered within 30!
Oh, and the carrier issued a “Reservation of Rights” letter too. Finally.
Here’s the sneaky part. The Carrier’s letter stated that it was reserving the right to pay on the claim, and listed two reasons. Then it said, there might be other reasons too, that it hadn’t yet listed all of them. Huh?
The reasons the Carrier did list were: no payments on punitive damages (that’s public policy in CA), and the potential that the claim was known before the policy took effect. OK, so far.
The complaint accused the broker of intentional misconduct. It also claimed the broker was negligent. When that happens the broker gets to pick its own lawyer – which the Carrier has to pay for.
But did the Carrier say that in it’s reservation of rights letter? Hell no. Why not?
Because if the Carrier did say that, the broker would know it could pick its own attorney – and the Carrier doesn’t want that. It wants to use inept attorneys like the one who never responded in the first place.
You get what you pay for.
So, have you EVER been told of the right you have to pick your own attorney? Ever once?
I didn’t think so.