Reason #465: If something goes wrong, i.e., an E&O claim occurs, and depositions/testimony is required, what will you and your staff say? Understand this: if you are a deposition/testimony virgin, the opposing council's job is to make you contradict yourself, make you look bad, make you stumble and definitely make you suffer.
Their job is to cause you to question why you are even worthy of an insurance license. Their job is not to find the truth. Discovering or developing the real history and solution has absolutely nothing whatsoever to do with the proceedings. No one really usually cares an iota about constructive development. Some attorneys may even abhor constructive development of the case because it will cause them to charge fewer hours. Finding construction simply is not always, If ever, their goal at this stage.
If you are not a masochist, you probably want to avoid these horrible experiences where maybe the only positive later is, "Whatever does not kill you, makes your stronger so I must now be stronger."
Meanwhile, these situations almost inevitably lead to loss of sleep, agitation, extreme anxiety, loss of confidence, and an inability to concentrate on other tasks to name a few side effects.
An E&O audit may not be fun or even cheap. An E&O audit is far, far easier than a deposition though and far better than a trial. And an audit is considerably less expensive in time and resources.
Another benefit is this: If you are making mistakes or being inconsistent, the safety of an audit environment is far better than a legal environment. E&O auditors (unless the situation is extremely extreme and maybe fraud is suspected on the agency's part) are generally on the agency's side. They are trying to help the agency discover its own weakness which is materially better than a plaintiff’s attorney helping discover those same weaknesses. If a weakness is to be identified, do you want someone that is there to help you or someone there to hurt you? Think of it this way: Do you want a doctor helping discover your illness and help you remedy yourself or do you want a trial attorney attacking you for your illness?
The illness is present either way. You may live with it a long time without suffering ill effects or catastrophe may strike overnight. If you think you will never be sued, buy lottery tickets too because if you are that lucky, you will probably win at least a small fortune playing scratch tickets. Otherwise, seriously consider having an E&O audit.
NOTE: The information provided herein is intended for educational and informational purposes only and it represents only the views of the authors. It is not a recommendation that a particular course of action be followed. Burand & Associates, LLC and Chris Burand assume, and will have, no responsibility for liability or damage which may result from the use of any of this information.