The Interplay of Multiple Laws Creates Complexity for Employers

Employers must navigate a labyrinth of federal and state laws, including the Americans with Disabilities Act (ADA), Family and Medical Leave Act (FMLA), and the Pregnant Workers Fairness Act (PWFA). Each law has its own requirements and often overlaps, making compliance a significant challenge—especially for small and mid-size businesses without dedicated HR resources.

The Importance of the Interactive Process and Documentation

A recurring theme is the necessity for employers to engage in a thorough, well-documented interactive process when handling accommodation requests. This includes obtaining appropriate medical documentation, understanding the essential functions of the job, and maintaining clear records of all communications and decisions. Proper documentation not only supports compliance but also serves as critical evidence if a claim arises.

Mental Health and Invisible Disabilities Are on the Rise

The episode highlights a marked increase in disability claims related to mental health and invisible conditions, such as anxiety, depression, and neurodivergent disorders. The normalization of remote work post-COVID has further complicated what constitutes a reasonable accommodation, requiring employers to reassess traditional workplace expectations and adapt to evolving employee needs.

Risk Management and Training Are Essential for Reducing Liability

Both the legal and underwriting perspectives stress the value of proactive risk management. This includes up-to-date employee handbooks, regular manager training, and clear policies on accommodations and leave. Smaller employers, in particular, are encouraged to seek outside counsel or HR support to avoid costly mistakes and ensure compliance with the ever-changing legal landscape.

Importance to Professional Liability Practitioners

This episode is especially relevant for professional liability practitioners because it underscores the growing risks and complexities associated with disability-related employment claims. As mental health issues become more prevalent and legal requirements continue to evolve, practitioners must be prepared to advise clients on best practices for compliance, documentation, and risk mitigation. The insights shared by both legal experts and underwriters provide a comprehensive view of the challenges and solutions, making this episode a valuable resource for anyone involved in professional liability, employment law, or HR risk management.

Interested in learning more about this topic? Listen to the full episode here.

Meet the Speakers

Laura Corvo, of White and Williams, represents employers in employment litigation and counsels clients on a variety of employment-related issues. She has extensive knowledge of federal, state and local employment laws and regularly counsels employers on a host of personnel and human resource issues including, employee hiring, discipline and termination matters, reductions in force, wage and hour compliance, family and medical leave compliance, and managing accommodations for disabled employees.

Victoria Fuller is a Partner and Co-Chair of the Labor and Employment Practice Group. She practices out of White and Williams’ Boston office. Victoria has over 17 years of experience as a civil litigator, focusing on employment litigation and counseling, higher education litigation, insurance coverage and bad faith litigation. Victoria is well-known for her creativity, commitment, efficiency and strategic focus with clients.

Chris Brooks is the Assistant Vice President of Management Liability at Berkley Select, bringing over 25 years of experience in the insurance industry. For the past 17 years, Chris has played a pivotal role at Berkley Select, where he has been instrumental in shaping underwriting strategies and delivering tailored management liability solutions. His deep industry knowledge and commitment to excellence have made him a trusted leader and advisor in the field.

FTC’s Enhanced Enforcement Under New Leadership

One of the most pressing topics discussed was the current state of the FTC under the current administration. The speakers outlined how the agency’s leadership is taking a more aggressive stance on enforcement, with increased scrutiny on corporate behavior, particularly among executives and board members. With growing momentum behind consumer protection and competition-focused initiatives, the FTC’s direction signals heightened risk for directors and officers—especially in areas where policies, contracts, or internal controls may fall short.

Non‑Compete Rulemaking in Transition

Another significant area of focus was the evolution of the FTC’s non-compete rulemaking. Attendees learned how recent rule proposals and litigation could dramatically reshape the way companies structure employment agreements. If finalized and enforced, the FTC’s efforts to restrict or ban non-competes will introduce new legal and operational challenges for employers. For D&O practitioners, this creates added risk exposure if companies are found to violate these evolving rules.

Emerging Risks from AI, Privacy, and Consumer Harm

The webinar also tackled emerging concerns around consumer harm, data privacy, and artificial intelligence (AI). The FTC has signaled an intent to regulate deceptive or unfair practices tied to AI use and data collection. Directors and officers must now contend with the potential for claims stemming from algorithmic bias, AI misuse, or privacy failures. These risks are no longer hypothetical and are becoming an increasing focus in both enforcement and litigation.

Proactive Preparation for D&O Investigations

An additional key takeaway was the importance of preparing clients for potential D&O claims tied to regulatory investigations. This means reevaluating coverage adequacy, educating boards on current FTC priorities, and proactively aligning corporate governance with federal expectations. Practitioners were urged to review how FTC enforcement pathways might trigger or overlap with D&O insurance policies and liability exposures.

Significance for Professional Liability Practitioners

For professional liability practitioners, this webinar underscored the urgent need to stay ahead of regulatory risk. The FTC’s expanding authority touches multiple risk areas—employment practices, data governance, consumer rights, and AI ethics—all of which can lead to claims implicating directors and officers. As regulatory scrutiny intensifies, PL professionals play a vital role in guiding clients through this evolving terrain and ensuring risk transfer solutions are properly structured.

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Meet the Speakers

Melea Hargis is a Vice President and D&O Coverage Specialist at Chubb, with over 20 years of experience. She has advanced from positions in private and public company underwriting to Branch Financial Lines Manager. In her current role, she consults with underwriters on key D&O coverage items and coordinates solutions with Chubb’s legal team. Melea holds an economics degree from the College of Saint Benedict/Saint John’s University in Minnesota.

Ruth Kochenderfer is Marsh’s D&O Product Leader and a broker for Marsh’s FINPRO (Financial and Professional lines) practice in Washington, DC. As a broker, she advises clients on the evaluation and design of risk transfer solutions that address financial and professional exposures, including directors and officers liability, errors and omissions, cyber security and privacy liability, employment practices liability, fidelity (crime), employed lawyers liability, and fiduciary liability. Ruth’s clients include publicly traded, as well as private, US and multinational clients in various industries.

Kathleen Benway concentrates her practice on government investigations and litigation and corporate compliance related to consumer protection issues, including privacy, security, advertising, fintech, and consumer financial services.

Kathleen’s experience makes her uniquely positioned to represent clients before the Federal Trade Commission (FTC) and other government agencies. She has over 12 years of senior-level experience with the FTC, including chief of staff to three directors of the Bureau of Consumer Protection (BCP), senior advisor to a former FTC commissioner, and counsel to two BCP directors, providing legal and policy advice across a range of investigations and litigation, rulemaking, and other consumer protection matters. Kathleen led FTC investigations and prosecuted privacy, data security, and unfair and deceptive business practice cases.

Cara Peterman is a partner with Alston & Bird’s Securities Litigation Group. She represents public companies and their officers and directors in securities class actions, shareholder derivative suits, M&A litigation, and other complex commercial litigation. She also regularly represents clients in investigations brought by the Securities and Exchange Commission and other regulators and conducts internal, board-level investigations into alleged corporate misconduct.

Cara additionally counsels corporations and their boards on public disclosure and corporate governance matters, with a concentration on cybersecurity, data-privacy, D&O insurance, and M&A-related issues. Cara is listed in Chambers USA for Litigation: Securities – Georgia and was selected as a member of the Daily Report’s “On the Rise” class in 2021.  She speaks frequently on securities litigation trends and executive-level cybersecurity concerns.

What’s Included

• Registration, travel and lodging to the annual PLUS Conference
• Personal leadership assessment and a half-day leadership training session
• Year-long group leadership meetings and coaching (virtual)
• Registration, travel and lodging for one additional PLUS education program selected by the participant  (D&O Symposium, Healthcare and Medical PL Symposium, Cyber University, Cyber Symposium, PLUS University)
• Mentor pairing with a senior-level PLUS member for 12 months
• Opportunities to network with PLUS senior staff and volunteer leadership
• Opportunities to participate in PLUS leadership
• VIP access at PLUS events
• Three complimentary PLUS Curriculum study modules during the program

Eligibility

• A professional within the Professional Liability Insurance industry with a demonstrated career commitment and interest in volunteer leadership opportunities in PLUS and/or civic-community organizations
• Committed to fully engage in all LAMP benefits

Application Deadline: Applications for the 2026 cohort close August 8th, 2025 at 5:00PM CT.

The LAMP program isn’t just a resume booster—it’s a transformational experience designed to accelerate your leadership journey. Through world-class coaching, deep mentorship, and exclusive access to high-impact events, LAMP helps you build the confidence, skills, and connections to lead with purpose. If you’re interested in growing your career while helping shape a more inclusive future for professional liability insurance, this is more than an opportunity—it’s a launchpad.

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This article synthesizes recent developments in professional and technological exposures confronting contractors, highlights the significant legal issues that flow from those developments, and offers practical guidance for underwriting and claims handling. While the discussion is grounded in U.S. law, many observations have broader relevance given the global diffusion of construction technologies and delivery models.

The Expanding Risk Landscape

A significant percentage of the U.S. construction workforce is nearing retirement, and projections signal a major and widening shortfall in coming years. A thinner, less-experienced labor force increases the likelihood of schedule slippage, cost overruns, and safety incidents—which can precipitate negligence allegations against the general contractor (GC) for failure to supervise or provide adequate manpower.

Supply chain disruptions persist, including material scarcity and inflated material pricing, forcing contractors to re-sequence work, substitute materials, and negotiate change orders mid-stream. These heighten the potential for defective work claims and spur contractors to deploy software solutions for real-time procurement and budgeting, introducing an overlay of technology-related risk.

A work-from-home culture has cooled demand for traditional office builds, and contractors following their clients into specialized sectors may confront unfamiliar standards of care, novel equipment, new project delivery methods, and compressed timelines—all fertile ground for professional liability exposure.

To keep pace, the construction industry, like others, has adopted technological advances, but with every step forward comes pitfalls. While building information modeling (BIM), AI-assisted design, drones, construction robots, wearables, and IoT sensors promise efficiency, precision, and safety, they may introduce cyber and data-breach vulnerability; automated design errors with downstream impact; intellectual property infringement claims from AI-generated content; property damage and bodily injury claims from hardware malfunctions; and questions of causation and fault allocation among software vendors, design professionals, and contractors.

Professional Liability Exposure to Contractors

Courts recognize that contractors, by virtue of their specialized expertise and compensated role, owe a duty of care to foreseeable third parties—even where they neither procured nor officially endorsed the design. Common allegations include negligent construction management, negligent value-engineering or constructability reviews that compromise performance, and inadequate oversight and/or supervision of professional subconsultants or inspectors.

For design-build entities, the risk multiplies. Even if design services are subcontracted to a licensed architect or engineer, the design-builder (e.g., GC) remains contractually or vicariously liable for professional errors. If the design subconsultant becomes insolvent or its claims-made policy is exhausted, the design-builder stands alone to answer the claim.

Defining “Professional Services” in the Policy: The Coverage Gatekeeper

The definition and scope of “professional services” within an E&O policy is key. Some policy forms enumerate covered services while others permit the insured to share in defining professional services in the policy endorsement.

Key considerations include:

• Breadth and specificity—a narrow definition may omit emerging activities such as BIM coordination, drone-based inspections, or pre-fabrication design assist.
• Endorsement precision—contractors must supply an exhaustive list of services; omissions create gaps.
• Overlap with Commercial General Liability (CGL) policies—most CGL policies exclude professional services outright.
• Claims professionals should confirm whether allegations fall solely within the E&O policy or straddle both policies, affecting defense cost allocation.

Technology-Driven Exposures

With regard to software, BIM and cloud collaboration tools have dramatically revised drawings and design. A single erroneous data entry can run through the model, producing latent defects. Software outages or cyberattacks can stop a project, resulting in significant delay claims. The issue becomes the root cause of a professional error, a cyber event, or both and which policy should respond. Other frequently used technology includes the following.

Drones

Used for survey, mapping, and façade inspection, drones raise concerns of crash damage, privacy invasion, and incorrect data capture. Many E&O policies now expressly exclude unmanned aircraft operations unless endorsed. CGL forms may provide bodily injury or property damage coverage but not remediation of faulty data.

Construction Robots and 3D Printing

Autonomous bricklaying, robotic-welding, and on-site 3D printed structures compress schedules and potentially lower cost. If a robot misaligns due to defective programming, is the resulting failure a covered “occurrence” under the CGL, a professional error under the E&O, or a product defect excluded from both? Claims handlers must parse policy language and causation theories early.

Wearables and IoT Sensors

From concrete maturity monitors to GPS-enabled safety vests, sensors generate vast data. Inaccurate readings may cause structural failure, and data breaches implicate privacy statutes. The intersection of property damage, negligence, and cyber liability requires coordinated claim management across multiple towers of coverage.

Contractual Risk Transfer and Anti-Indemnity Limitations

Contractors often rely on hold harmless provisions, yet these generally are strictly construed by courts, written poorly without recognition of jurisdictional restrictions on such clauses, and not tailored to individual projects and the parties contracting.

In addition to the uphill battle of enforcing a hold harmless clause, contracting parties frequently do not understand what coverage is actually being afforded:

• They may not understand the nuances of E&O policies, builders’ risk policies, general liability policies, and other requisite coverages for a construction project.
• If they rely on contractual promises alone, the result is often inadequate coverage and increased risk exposure. The actual policy language may not honor contractual indemnity obligations.
• They may not realize professional indemnity policies are typically claims-made, and if the consultant retires or allows coverage to lapse, the contractor’s tender will fail.

Statutorily, contractors and design professionals must be wary of anti-indemnity statutes, which have been adopted by multiple jurisdictions and limit or bar altogether contractual clauses. Accordingly, sophisticated contractors must secure their own E&O coverage rather than rely solely on downstream indemnity or additional-insured status (where it may not be afforded).

Coverage and Claims-Handling Implications and Best Practices

There are some takeaways that can assist in navigating the path to effective resolution:

• Early Triage of Allegations. Determine whether claims sound in faulty workmanship (CGL), professional negligence (E&O), or technology-failure/cyber (stand-alone cyber or tech E&O).
• Concurrent Defense and Allocation. When multiple policies potentially apply, joint defense protocols and cost-sharing agreements reduce friction and preserve insurer relationships.
• Expert Selection. Cases involving BIM, robots, or IoT data demand experts fluent in software architecture, coding, and data forensics, in addition to traditional construction disciplines.
• Preservation of Digital Evidence. Drone footage, BIM revision histories, and sensor data logs are ephemeral. Claims professionals should issue litigation holds and coordinate with insureds to preserve metadata.
• Reinsurance Notice. High-severity technological claims can erode limits quickly. Prompt notice to reinsurers is imperative.

Practical Recommendations

With modernization and fast-paced change in construction comes greater and different risks. Our recommendations to manage that risk herein are not exhaustive but highlight essential recommended actions:

• Contractors should work closely with brokers and legal counsel to conduct regular, comprehensive reviews of professional and tech-related activities required in the scope of work as compared with actual work being conducted on each project.
• Policy language should align with contractual obligations and professional services defined accordingly.
• All contract documents should be project-specific, regularly reviewed, and require adequate proof of current coverages from all subcontractors and subconsultants, including professional liability coverage, and require right-of-review policy forms to confirm proper coverages.
• Lastly, contractors should maintain parallel cyber coverage to capture data breaches and network interruption.

In addition:

• Insurers and claims professionals should regularly (1) update underwriting questionnaires to penetrate the insured’s technology level and data-governance protocols and (2) draft technology endorsements clearly delineating coverage intent and exclusions.
• Claims professionals should be trained to recognize emerging technologies and associated risks to be able to quickly and effectively mitigate risk and ensure accurate liability assessment and reserve setting.
• Defense counsel for contractors engaging in professional services and design professionals should:
  • Work with clients, brokers, and insurers to formulate risk management training that keeps pace with emerging technological exposures.
  • Be aware of the evolving standard of care applicable to contractors’ professional and technological functions on projects.
  • Anticipate challenges to novel expert methodologies relying on AI or algorithmic reconstruction of events.
  • Most importantly, continue to review, counsel, and draft contract documents that harmonize project delivery method and scope of work of the client with indemnity, insurance, and technology licensing provisions, which, to the extent possible, fully protect the interests of contractor and design professional clients.

Conclusion

The convergence of professional services and cutting-edge technology has irreversibly altered the contractor’s risk profile and, by extension, the insurance products and claims strategies required to address it. E&O coverage—properly structured and carefully managed—creates an effective risk-transfer strategy and provides for adequate coverage on a protect. Claims professionals who understand the risks, take proactive steps to effectively transfer risk, and keep up with technological innovation will be best positioned to evaluate exposure, control loss costs, and deliver superior outcomes for their insureds.

Meet the Authors

Wendy D. Testa, Cochair, Design Professionals Practice, Philadelphia, PA

Wendy Testa is a partner and cochair of Wilson Elser’s national Complex Tort & General Casualty and Design Professional practices.  She focuses her legal practice on risk management services, and defense and insurance coverage litigation in the areas of professional liability, including architects/engineers as well as other construction professionals; real estate and insurance brokers/agents; construction/construction defect liability; product liability; and contract drafting, negotiating and risk transfer disputes on behalf of developers and contractors. Wendy handles defense and coverage matters for the U.S. and London insurance markets. Her understanding of these markets and varied underwriting practices as well as her experience in drafting and interpreting policy language contributes to her effectiveness with coverage analysis and as a litigator in her areas of practice.

In addition, Wendy has a breadth of real estate E&O defense experience managing and resolving claims on behalf of large national property management and brokerage firms as well as litigating disputes throughout the United States on behalf of real estate brokers, appraisers, title abstractors, home inspectors, insurance brokers, managing agents and broker-dealers. In addition to efficiently managing claims, she assists our real estate professionals in licensing and regulatory matters as well as navigating complex contractual issues, leases and agency agreements; performing due diligence related to acquisitions; helping to ensure fair housing and other applicable statutory and/or local code and regulatory compliance. Wendy’s experience in the insurance and real estate industries results in spot-on analysis of liability and exposure and effective resolution strategies.

First and foremost, Wendy is an aggressive advocate for her clients. She develops strong client relationships through trust, responsiveness, reliability and attention to detail. From inception to the successful conclusion of a case, her skills, experience and focus are all directed toward achieving a cost-effective resolution strategy in anticipation of her clients’ needs. Wendy is an efficient and effective litigator as a result of her responsiveness and attention to detail and the key issues of each case.

Ryan A. Williams, Cochair, Design Professionals Practice, Denver, CO

Ryan Williams represents clients in complex premises liability and high-exposure general liability cases, construction defect matters, trucking and transportation matters, professional liability on behalf of architects and engineers, and nursing home and elder law matters. In addition, Ryan handles real estate litigation; commercial disputes in federal and state courts; and employment litigation, representing employers in cases arising under state and federal fair employment practices statutes. He has prevailed in numerous jury and court trials, and has extensive appellate experience before the Colorado Court of Appeals and Colorado Supreme Court. This wide-ranging experience enables Ryan to effectively represent clients at all stages of litigation. He partners with national and regional insurers to achieve effective defense strategies and resolution of claims in these areas.

Ryan clerked for the Honorable JoAnn L. Vogt of the Colorado Court of Appeals, where he researched and wrote on a broad range of legal topics, including commercial and real estate disputes, insurance law, and corporate, shareholder and fiduciary responsibilities. He then moved to a prominent Denver business firm, where he specialized in construction and real estate litigation. The son of a contractor, Ryan understands the unique needs of construction professionals and the legal issues they and their insurers face.

Casie A. Salvadore, Associate, Philadelphia, PA

Casie Salvadore represents businesses and individuals in all aspects of civil litigation. Her practice focuses on the defense of claims involving general liability, professional liability, product liability, construction defect and accident, premises liability, and transportation/trucking liability. Casie’s experience includes handling insurance coverage disputes, as well as drafting and reviewing contracts.

Casie began her career at Wilson Elser as a law clerk in the Philadelphia office during law school. Previously, as a law student, Casie honed her research and writing skills as a property law research assistant, represented clients as a student attorney in the Clinic for Asylum, Refugee & Emigrant Services, and received the law school’s Dorothy Day Award in recognition of her outstanding achievement in pro bono service. Her interest in pursuing a legal career was piqued prior to law school, working as a legal assistant in the civil litigation unit at the Wisconsin Department of Justice.

In Hespen v. Erie Insurance Company, Levy Insurance Company, LLC and Thomas Levy, 332 A.3d 1229 (Pa. Super. 2024), the Pennsylvania Superior Court rejected the appellants’ assertion of the applicability of the doctrine of reasonable expectations. The appellants had entered into a stipulated judgment with the company of a tortfeasor driver who injured Mr. Hespen, accepting an assignment of rights of the company, Karalis Mechanical Services, LLC, against its insurer, Erie, and insurance agency, Levy Insurance Agency, LLC and agent Thomas Levy. Karalis had a commercial general liability policy procured by Levy and underwritten by Erie, and obtained an umbrella business catastrophe policy (BCL) with Erie after the subject automobile accident occurred. Karalis had a separate commercial automobile policy with State Farm at the time.

Erie denied coverage for the accident under the CGL policy, which excluded automobile liability, and under the BCL policy because it was not in effect on the date of loss and the coverage only applied to automobiles insured by Erie. The trial court granted Erie’s and Levy’s motions for summary judgment, and appellants appealed on the basis of the reasonable expectations doctrine. That is, whether the trial court had erred in refusing to consider the expectations of the insured, Karalis, and in finding that Karalis did not have an expectation of coverage as a matter of law.

In evaluating this claim, the Pennsylvania Superior Court considered the plain language of the Erie policies themselves, as well as Mr. Levy’s conduct regarding insurance procurement. Approximately one year prior to the accident, Mr. Levy provided an Erie Business Auto Policy quote, which would have covered the vehicle involved in the accident. Karalis opted to continue its auto insurance coverage with State Farm based on price and emailed Mr. Levy with this decision and rationale.

The doctrine of reasonable expectations is designed to protect “a non-commercial insured from policy terms which are not readily apparent, and to protect non-commercial insureds from deception by insurance agents.”  Hespen, 332 A.3d at *4 (citing Matcon Diamond, Inc. v. Penn Nat. Ins. Co., 815 A.2d 1109, 1114 (Pa. Super. 2003)). Here, Karalis was a commercial insured, and there was no deception. Indeed, the terms of the Erie policies were unambiguous: Mr. Levy provided a BCL quote as requested, and Mr. Karalis never responded to the quote until after the accident occurred; and even if the BCL policy had been in effect, Erie would not have covered the loss, as Karalis had rejected the Erie auto quote (and thus the auto involved in the accident was not insured by Erie). Moreover, the court was unconvinced by Mr. Levy’s note in his computer system about “adding auto” to the commercial policy.

Given the court’s rejection of the doctrine of reasonable expectations, appellant’s claims against Erie, Levy Agency and Mr. Levy lacked support, and the Court affirmed the trial court’s summary judgment rulings.

With respect to the claims against Levy specifically, this case is a reminder of the oft-cited best practice to contemporaneously memorialize customer interactions and communications. Here, Mr. Levy offered auto insurance for Karalis with Erie, which was rejected, and the offer to procure BCL coverage was not accepted until after the accident, despite repeated follow-up by Mr. Levy. These communications evidenced Karalis’ intentions regarding auto insurance and did not support a finding of deception.

This case also bolsters the existing case law governing the application of the doctrine of reasonable expectations, reiterating the criteria articulated in Matcon, supra: “This Court has noted that, generally, courts cannot invoke the reasonable expectation doctrine to create an ambiguity where the policy itself is unambiguous. Our Supreme Court has identified only two limited exceptions to this principle: (1) protecting non-commercial insureds from policy terms which are not readily apparent; and (2) protecting non-commercial insureds from deception by insurance agents.”

This piece was originally launched on the Marshall Dennehey client newsletter.

Meet the Author

Dana A. Gittleman is a shareholder in Marshall Dennehey’s Professional Liability Department in Philadelphia where she focuses on the defense of claims and lawsuits brought against insurance agents and brokers, real estate professionals, attorneys, directors and officers, and large product manufacturers.

For agents, brokers and underwriters, it is paramount that our insureds understand application questions and answer them correctly. A recent federal court decision to rescind all of an insured’s policies serves as a stark reminder of what happens when material misrepresentations occur on renewal applications.

The Case: Mount Vernon Fire Insurance Company v. The Kelemen Company Inc.

In May 2025, the U.S. District Court for the Central District of California granted summary judgment allowing Mount Vernon Fire Insurance Company to rescind five consecutive Employment Practices Liability policies based on material misrepresentation. The court also awarded the insurer reimbursement of all attorney fees incurred in defending the insured.

The Critical Application Question

The renewal application included this detailed question:

“Within the last 5 years, has any employment related, or third party discrimination, or third party harassment inquiry, complaint, notice of hearing, claim or suit been made against any entity for insurance or any person proposed for insurance in the capacity of either director, officer, member (if an LLC), or employee of any entity proposed for insurance?”

The insured’s answer: “NO”

The reality: This was false.

What Actually Happened

The Operations Manager, Tam Doan, completed the renewal application for the firm’s Employment Practices Liability coverage. She marked “NO” to the warranty question, indicating they weren’t aware of any executive team members being named in employment-related suits within the specified timeframe.

Except that wasn’t true.

One of their executives, Tibor Kelemen, had been accused of sexual harassment at his former company (Wind Water Realty Inc.) in 2015. Under the broad language of the application question, this prior allegation at a different company still required disclosure since it involved “any person proposed for insurance in the capacity of director, officer…or employee.”

The Smoking Gun Evidence

You might think the Operations Manager wasn’t aware of this executive’s legal history – that she answered “NO” incorrectly due to ignorance.

Court documents revealed otherwise. Email evidence showed that Doan had disclosed the situation to their insurance broker, stating that “the reason [they were] getting the policy in the first place” was due to the allegations against Kelemen. She knew about the prior harassment allegations when she signed the application.

So why did she mark “NO”?

The court didn’t speculate on her motivations. Perhaps she thought the question referred only to new situations. Maybe she assumed the carrier was already aware. Regardless of her reasoning, the application contained a material misrepresentation, and the legal consequences were severe.

Legal Framework: Material Misrepresentation and Rescission

Rescission voids the policy ab initio (from the beginning), as if it never existed – and courts will uphold rescission when insureds make material misrepresentations that affect coverage decisions.

Industry Implications by Professional Role

For Underwriters:
When insureds answer “YES” to prior claims, probe for all executives’ histories and ask specifically about claims at former companies involving current personnel.

For Claims Professionals:
Examine email communications and internal documents during discovery to look for evidence that insureds had knowledge of unreported situations.

For Brokers:
Conduct detailed application interviews rather than simply forwarding forms. Explain the broad scope of “any person proposed for insurance” language and document disclosure conversations in writing.

Current Market Context

The EPL market has become increasingly scrutinized, making accurate disclosure more critical than ever.

Risk Management Framework

Who Should Complete Applications:
Organizations should involve senior executives and legal counsel rather than delegating to operations managers.

Ongoing Disclosure Obligations:
Many insureds mistakenly believe disclosure is a one-time requirement. Best practices include implementing mid-term notification procedures for material changes and establishing protocols for immediate carrier notification of new claims.

Key Takeaways for the Industry

1. Application accuracy is non-negotiable – Even well-intentioned mistakes can void coverage entirely
2. Knowledge attribution matters – If anyone completing the application knows relevant facts, disclosure is required
3. Documentation is critical – Email evidence can prove knowledge and intent in rescission cases

Conclusion: Building a Sustainable Framework

The Mount Vernon case demonstrates that transparency benefits everyone in the insurance ecosystem. Brokers who push clients to disclose everything, underwriters who price risks accurately based on full information, and claims professionals who can handle matters without rescission surprises – this creates a sustainable market for challenging risks.

When application questions are answered incorrectly, whether intentionally or through misunderstanding, the consequences extend beyond individual cases. They erode market confidence and reduce capacity for legitimate risks that need coverage.

Let’s work together to ensure that when claims arise, everyone is on the same page and the claims process develops without surprises or hitches. The alternative, as Mount Vernon v. Kelemen demonstrates, leaves insureds with no coverage and no recourse when they need protection most.

The author provides this analysis for educational purposes. Specific coverage questions should be directed to qualified insurance professionals and legal counsel.

Meet the Author

Lucas Roberts

Wholesale Broker, Anzen

Lucas Roberts is a professional lines specialist with experience in both underwriting and wholesale brokerage. He maintains an active LinkedIn presence, regularly sharing insights on professional liability developments. This blog takes a deeper dive into developments that have far-reaching consequences for the professional liability market.

You can see more of Lucas’s Claims Made Bites on his LinkedIn.

For brokers, navigating these moments requires more than technical knowledge. It demands empathy, clear communication, and the ability to guide clients through uncertainty without sacrificing professional boundaries. In this article, we’ll explore how brokers can balance their expertise with emotional intelligence to effectively support clients during one of the most stressful phases of the insurance process.

The Emotional Weight of Professional Liability Claims

Professional liability claims carry a unique emotional weight. Unlike a property claim, these situations often call a person’s competence or integrity into question. Clients may feel anger, fear, embarrassment, or anxiety about potential reputational damage, financial consequences, or regulatory action. Additionally, the insured may question the future implications of the claim, such as impact on premium or their ability to find coverage in the future. We know that the client purchased insurance for this exact reason, but the client may be left upset that they must call on their carrier, especially if they deem the claim meritless.

Left unaddressed, these emotions can escalate, leading to strained broker-client and carrier-insured relationships, miscommunications, and unrealistic expectations about the claims process.

Why Empathy Matters During the Claims Process

On any given day, brokers serve as both technical advisors and client advocates, but during a claim, they must also become emotional guides. Clients look to their broker not only for expertise but for reassurance. Striking the right balance for the broker means demonstrating empathy while remaining objective, helping clients process complex information that likely wasn’t covered in their professional training, providing realistic, fact-based guidance, and correcting misconceptions.

At the same time, it’s essential for brokers to recognize their professional boundaries. While being a source of support, brokers are not legal counsel nor mental health providers. Maintaining those distinctions protects both the client and the broker. As such, navigating emotions in understandably tense situations requires a proactive, thoughtful approach.

Practical Communication Strategies for Brokers

• Active Listening: Allow space for clients to vent concerns or frustrations without immediately shifting to solutions. Sometimes, clients need to be heard before they can process next steps.
• Empathetic Language: Acknowledge how difficult the situation is. Phrases like “I understand this is upsetting” or “You’ve worked hard to build your reputation. I know how stressful this is” can defuse tension while underscoring your ability to serve as their guide. You’ve been here before with other clients, but this may be their first go-round.
• Step-by-Step Guidance: Break down the process into manageable pieces to reduce overwhelm. Providing clients with a roadmap for what happens next builds confidence and reduces fear.
• Set Expectations Early: Be transparent about what to expect in terms of timelines, processes, and possible outcomes while remaining inside your ability, scope, and understanding. Uncertainty amplifies anxiety; clarity helps contain it. If you aren’t sure, refer the client to their claims team to prevent misinformation.
• Remain Calm and Composed: Even when emotions run high, brokers should model steadiness. Escalating emotions rarely leads to productive outcomes. These consequences might be clear to an established professional liability practitioner but won’t be obvious to someone without that background. Enlightening the insured about potential adverse outcomes to their actions, such as declining to settle a claim covered under a policy with a hammer clause, may prevent those outcomes altogether while also reminding them you are their advocate. Insureds are unlikely to change the course of the entire insurance industry with their objections and may benefit from being gently reminded of that.

Building Trust Through Clear Communication

Clear, consistent communication with your insureds builds trust throughout the claims process. Silence can create frustration and erode confidence in both your abilities as their broker and in the company entrusted to protect their reputation. As a broker, you can simplify complex policy language to help clients fully understand the coverage provided, any exclusions, their responsibilities as an insured, and any claims reporting requirements so they don’t jeopardize their coverage. Following up on verbal conversations you’ve had with your clients with written summaries will relieve them of the duty of remembering what was discussed during a high-stress time, prevent misunderstandings, and maintain your records. As needed, brokers should coordinate with carriers and claims teams to deliver unified messaging to their mutual insureds and avoid conflicting information but defer to the expertise of the carrier’s claims teams. You can and should manage expectations regarding concerns only for which potential outcomes are within your wheelhouse. Being upfront prevents future disappointment.

A professional liability claim is often one of the most stressful experiences a client can face during a potentially high-stakes career. Brokers who can balance empathy with expertise not only guide clients through technical complexities but also help them understand and prepare for what comes after the emotional strain. Doing so strengthens client relationships, fosters loyalty, and enhances the broker’s reputation as a trusted advisor. In an industry built on trust and service, mastering the emotional side of claims advocacy isn’t just a soft skill; it’s also a strategic advantage.

Meet the Author

Faith Karson

Custom Med Mal Insurance Creator, L&J Insurance Services, Inc.

Faith brings 4 years’ experience in the professional liability insurance industry to the team at L&J Insurance Services, Inc. L&J is a boutique independent insurance brokerage that has specialized in hard-to-place medical malpractice insurance for individual providers and small groups for over 40 years. Faith thrives on the challenge of finding tailored coverage solutions that protect L&J’s clients against potential exposure. She takes pride in working closely with healthcare providers throughout their careers, offering personalized support, and helping them navigate career transitions while ensuring their evolving insurance needs are continuously met. She values the trust her clients place in her and works diligently to earn it by providing clear, honest advice and responsive service. Committed to continuous learning, Faith stays current with industry trends and enjoys the dynamic nature of her role. Faith has a BA from NYU, is a Six Sigma Green Belt, and earned the Certificate in Medical Professional Liability from PLUS.

Here are four key takeaways from their discussion:

Cyber Threats Are Growing More Sophisticated

This episode emphasized the increasing complexity of cyberattacks. Threat actors are now exploiting zero-day vulnerabilities—flaws that haven’t even been publicly disclosed—giving them a dangerous edge. Compounding the issue is the rise of AI in cybercrime, which has led to hyper-realistic phishing emails, fake communications, and smarter malware.

Business Email Compromise (BEC) Remains a Persistent Threat

Attention was called to the continued prevalence of BEC attacks, which have evolved despite growing awareness and improved security tools. Criminals use convincing social engineering and AI-generated content to trick employees into divulging sensitive information or wiring funds. These schemes, often low in complexity but high in impact, remain one of the most financially damaging forms of cybercrime.

Employee Training Is Still the First Line of Defense

A recurring theme in the episode was the importance of human awareness. Even with the best security systems, human error remains a key vulnerability. Shannon and Erchov both stressed that ongoing, comprehensive employee training on phishing and cyber hygiene is essential.

Cybercriminal Tactics Continue to Evolve

One particularly striking example shared by Erchov involved a multi-layered attack: attackers flooded a victim’s inbox with spam emails, then impersonated IT helpdesk staff to offer “support”—gaining remote access in the process. This kind of social engineering, aided by automation and AI, underscores the need for businesses to implement layered defenses and verify internal communications rigorously.

As the cybersecurity landscape continues to shift, staying informed is imperative. Regular updates to security protocols, a strong culture of cyber-awareness, and attention to emerging threats can help organizations stay ahead of increasingly resourceful adversaries.

Interested in learning more about this topic? Listen to the full episode here.

Meet the Speakers

David J. Shannon, Esq.

Chair, Privacy & Data Security Practice Group; Chair, IP, Technology & Media Litigation Practice Group, Marshall Dennehey

David J. Shannon is a shareholder at Marshall Dennehey, where he leads both the Privacy and Data Security, and the Intellectual Property Practice Groups. David concentrates a substantial portion of his practice on privacy law, data breaches, ransomware attacks, intellectual property and copyright and trademark infringement. He is experienced in defending privacy and intellectual property cases throughout the United States. David is an international speaker at privacy and data security conferences and seminars, where he discusses legal issues and emerging trends in the privacy arena. djshannon@mdwcg.com; www.marshalldennehey.com

We’re excited to launch the Future PLUS LEAD Program, the first flagship offering under the Future PLUS Advancement Initiative, introduced in 2025 to bridge knowledge gaps and develop leadership among professionals aged 35 and under.

This six-week instructor-led program blends scenario-based discussions, an interactive digital whiteboard, and breakout sessions to build practical leadership skills in a collaborative environment.

Who Should Participate

Ideal for professionals with 4 to 7 years of experience in the professional liability industry, this program is designed for both individual contributors and people managers ready to take the next step.

Individual Contributors: 
Fast-track your leadership journey and build a strong peer network in a supportive, collaborative environment.

People Managers: 
Refine and expand your leadership toolkit with fresh insights and practical strategies to support your current role.

Program Benefits

LEAD program participants will benefit from:

• Expert-Led Sessions: Learn from experienced industry professionals who bring real-world insights and practical applications to every session.​
• Collaborative Virtual Environment: Engage in live, instructor-led workshops designed to foster interaction, discussion, and peer learning.​
• Cross-Functional Networking: Connect with professionals from a variety of business lines, role types, and geographic locations to broaden your perspective and build your network.​
• Smaller Cohort Sizes: Participate in a more personalized learning experience that encourages deeper conversation and meaningful connections.​
• Interactive Collaboration Tools: Utilize Miro, a live digital collaboration platform, to engage with fellow participants during and between sessions.​
• Comprehensive Learning Resources: Gain access to a variety of tools including case studies, handouts, leadership assessments, and curated book recommendations.
• Early Access to Facilitators: Take advantage of early session access to ask the facilitators questions that will help tailor the experience to your leadership challenges and goals.​
• Progress Tracking: Receive a post-program completion certificate and a summary that highlights your growth and progress across key leadership competencies.
• PLUS Conference Networking: Cap off your experience with an exclusive in-person networking opportunity at the PLUS Conference. Conference registration not included, but Future PLUS members can use code FP2025Event for 20% off registration.

Logistics & Enrollment Details

• Investment: $450
• Cohort size: 25 seats
• Format & schedule: Virtual sessions on Tuesdays, from 1:00–2:30 PM CT, from September 23rd to October 28th, 2025.
  • The September 23rd session will start at 12:30 PM CT to include an overview of Miro, the interactive digital whiteboard.
• Registration is now open—secure your spot today!

Learn More and Register

The Future PLUS LEAD Program is more than leadership training—it’s a strategic move to cultivate the next wave of industry leaders.

Not a Future PLUS member but know someone who would be a great fit? Share this opportunity and encourage them to register. Support their participation and demonstrate your commitment to talent development, leadership growth, and future-ready teams.