Polling letters are highly advantageous for securing errors & omissions coverage as they poll the insured’s key employees to check that they know of the incidences that could cause a claim. For claims-made coverage, instances may call for their use as it responds to defend, pay or indemnify only claims that are made or filed throughout the policy period. If claims are not properly reported during the policy period or extended reporting period, it could lead to significant coverage limits, restrictions or the coverage could even be denied altogether.
Main types of claims-made policies:
A pure claims-made policy is triggered when claims are made during the policy period with covered wrongful acts or errors.
A claims-made and reported policy responds only when the claim is reported to the carrier in the same policy year that the claim was received.
Both types of policies have an option to be extended, however the ERP will be activated at different points in time. Keep in mind that polling letters will be required for liability coverage when the basic or automatic extended reporting period is triggered, there is a reduction in coverage, or the retroactive date is advanced.
ERP can be triggered by 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. In these instances, the insured must be polled to check if there are claims that require reporting to the insurance carrier. Failure to report a claim that should have been can likely result in the insured being penalized with restrictions or denial of coverage. ERPs will give your clients additional time beyond the end of the policy period to submit a claim, which could be anywhere from 30 or 60 days beyond the policy’s expiration. This time can be extremely beneficial for your clients. All in all, polling letters are important to assure all claims and potential claims are revealed in these types of occasions.
Coverage restrictions and advanced retroactive date are both changes in which the insured is losing protection they once had. If exclusionary endorsements are attached at the time of policy renewal, the insured will not have the same scope of coverage they had previously. With an advanced retroactive date, the instances in between the previous retroactive date and before the new retroactive will not be protected as well. Due to the large reduction in protection, it would be greatly advantageous for your clients to be able to file any potential claims covered under the current policy in which the renewal policy would not grant coverage. Polling letters are a great opportunity to effectively gather this information. No matter the instance that triggers the need for a polling letter, your clients must complete all polling letters in a prompt manner (a minimum of 10 days prior to the expiration of the current) so there is plenty of time to file new claims that may be excluded under the renewal policy.
Be sure to include the definition of a claim as provided in the policy within the polling letter since there is no singular definition of a claim. When dealing with potential claims or a similar term within its definitions, include that as part of the polling letter as well.
How a polling letter is completed will depend on certain factors such as the size of the company. Officers and directors can complete the letter polling for a corporation, members and managers can fill it out for an LLC, partners can for a partnership and the sole proprietor and key managers can for a sole proprietorship.
Letters are also very useful as they can be pulled for any client-provided coverage on a claims-made form which are commonly used to provide directors & officers, employment practices liability insurance, E&O, professional liability and sometimes even general liability for unique insureds. The method of polling letters can easily be added to any renewal routine where a claims-made policy is involved. It offers significant benefits when CA E&O insurance coverage is written on a claims-made and reported form since completion is required for renewal.
About IPRO Agency Insurance Services
IPRO Agency Insurance Services is a specialty insurance brokerage with the expertise to protect your firm, assets and to help you retain clients. Our services offer all types of professionals the protection they need so they can stay committed to their work with ease. We are connected with leading insurers to bring you the best coverage for your unique needs and areas of risk. Get in touch with us at 888- 673-8039 so we can begin to safeguard your success.