Some pitfalls affecting 'claims made' liability insurance...
Written on the 16th of June 2010
Consider this hypothetical scenario: Joe, a successful financial advisor, has just completed his 10th year in business. The recent economic recession is looking more distant every day that passes, and experienced financial advisers like Joe are enjoying a steady increase in new clients. However, just as Joe reaches his office one day, a letter arrives. It's from lawyers acting for one of his former clients, Bob Smith. Bob was one of the "unlucky" ones: all his savings were invested in MFS, a now-defunct finance company, and he lost the lot. Although Joe hasn't seen Bob for nearly two years, he vividly recalls Bob's anger at learning about the loss of his savings. Bob had demanded that Joe reimburse his losses ... "it was your advice I followed ... it was your fault ... I'll sue you", he'd said. However, Joe didn't hear from Bob again after that. Until now. Joe looks at the lawyers' letter, and sees that Bob is seeking over $500,000, alleging "negligence" by Joe.
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