Frequently as a
commercial insurance broker, we are looking for solid coverage while also looking to obtain the best pricing for our clients but sometimes their is a hidden benefit that it over looked or undervalued. The often quoted and rarely understood "dovetailing" of policies is a very important factor and should not be overlooked when evalutaing an insurance program. Dovetailing is the practice of obtaining insurance policies that have overlapping areas of coverage from the same carrier to prevent coverage issues should a claim arise.
Example: Web 2.0 Company provides software as a service and sells its software to doctors officers around the country. As the spokesman and CEO, Mr. Saas often speaks with large medical groups about the effectiveness of his product and how it will save their organizations time, money and revolutionize their back office. Web 2.0 Company sells their software to BIG Physicaians Group who pays $1 million in impliemntation fees and $1 million a year for licesening after hearing Mr. Saas speak at a physicians conference. They so believe in his statements and that the software will do what he says that they want it up and running ASAP. Big Physicaians Group installs the software and then it sits for a year. They later determine that the software is not capable of handling their needs, a
professional liability claims(E&O) and in addition that they were mislead by Mr. Saas at the conference. A suit is filed alledging the software was purchased by Big Physician Gorup that failed to handle the needs of the client and caused major damage to their existing infrastucture and in addition that Mr. Saas was personally liability for the misleading statements. In this scenario we have two seperate policies being triggered, the
professional liability policy would respond to the claim that the software did not perform as it was intended too perform and the major damage to Big Physicians Groups infrastruture. The insureds
Director's and officers insurance would respond to personally defend Mr. Saas who was named personally for providing misleading statements about the product.
If these two insurance coverage are placed with different carriers they may have difference on which policy responses, how much limit is available, and even whether they are responsible to defend. If you place the coverage with the same carrier they become dovetailed making sure that any areas of overlapping coverage would fall under the responsibility of the same carrier making these points of contention for the insurance carrier moot.
If you would liek to further discuss the merits of dovetailing coverages,
D&O or E&O insurance quotes please contact me, or for a quote you can visit us here.
