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Farmers Errors and Omissions Claims against its Agents

Posted by administrator 
Farmers Errors and Omissions Claims against its Agents
February 09, 2010 08:26PM
Rec via email

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One of the more common types of errors and omissions claims is by Farmers against an agent.

Rather than deny the claim or pay a rightful claim as required, Farmers frequently pays a claim and then subrogates the loss against the agent involved. When the agent is insured with the Farmers group sponsored agents E&O plan, the plan carrier has the sole right to pay the claim with the agent having no voice. The agent cannot litigate the matter and as Farmers pays the plan carrier close to $40,000,000 in premium, it appears to get its way frequently.

As a result Farmers is able to shift losses to the E&O plan at no cost as Farmers pays none of the premium, only the agency force. The agents frequently have a deductible waiver clause and have no direct out of pocket cost in this case. Many claims are settled with the “negligent” agent never aware of the loss paid in their name.

Farmers has also had a waiver of subrogation clause in its favor inserted in the policy in conjunction with the vicariously liability endorsement thereby guaranteeing itself no costs or accountability.

Eventually the claims add up and as the Farmers group sponsored plan is a guaranteed issue plan where the agent cannot be cancelled for claims or rates individually increased, the plan carrier’s only remedy is to increase rates for the agency force as a whole.

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Hello,

Looking for advice on the E & O issue. Was a new agent in 9/12 till 6/13 trying to take over a struggling agency. I had / have over 30 yrs experience with the leading P & C company in N America with never a blemish on my record. Got a vm yesterday 11/12/2019 from someone saying they needed to speak with me regarding a mobile home claim that was paid and Farmers is now seeking subrogation from my E & O policy?? WTF?? Someone in the know please let me know what you think? What a joke..Thanks

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