If a client has filed a lawsuit against your company for negligence or failure to perform the duties of the business contract, you may be worried about what this means for your business. Fortunately, if you have E&O coverage in place, the losses shouldn’t be too great. However, for your policy to be of any use, there are certain things you must do (and others that you shouldn’t) to ensure that your claim is handled as smoothly and efficiently as possible.
The Do’s of an E&O Claim
First and foremost, promptly report the allegation. Too often, business owners do nothing in the hopes that the suit will go away, or they try to handle it themselves first to avoid going to court. Doing either of these is a huge mistake, and will just result in lost time, resources and possibly a lost case.
Also, stay calm, as most E&O claims arise from disgruntled clients as opposed to any real error on your part.
The Don’ts of an E&O Claim
There are several things you can do to sacrifice your claim, including accepting liability and trying to settle the dispute yourself, altering or making changes to a file or claim or providing a written or recorded statement regarding the incident without the blessing of your E&O carrier. If you want your E&O coverage to work for you, avoid making these mistakes.