It's bad enough that for years the insurance industry has grouped together investigators with their more hazardous counterparts, security guards. This has obviously penalized investigators and cost them money. But now it is becoming increasingly apparent that the coverage provided to investigators does not fully protect them from many new exposures they face. The insurance industry has been very slow and reluctant to respond to this very real coverage void. The coverage that is lacking is real professional liability insurance. To the best of our knowledge, the vast majority of insurance companies that presently specialize in writing private investigative agencies do not provide this coverage.

Years ago, the real or imagined exposure with investigators were invasion of privacy lawsuits, assault claims and malicious prosecution cases. Insurance underwriters conjured up in their minds all kinds of worst-case scenarios involving private eyes. The stereotypical "gumshoe" was accused of everything from kicking down motel room doors to entrapping insurance claimants, to roughing up witnesses. Today the investigative field has become far more sophisticated and its focus has shifted to such things as due diligence reports, forensic accounting, executive background checks and computer theft. The typical claim today involves not what an investigator did but what he failed to do. The failure to properly check out a Fortune 500 executive could cost his new employer hundreds of thousands of dollars. The failure to detect account irregularities or a computer virus could cost a company millions. A significant error in a due diligence report could have a major impact on Wall Street. These potential investigative failures, errors or omissions could mean substantial financial losses to investigative clients. They in turn could seek legal redress against the investigative agency that committed the error. Surprisingly, 95% of the investigative agencies in this country faced with such lawsuits would find that their present liability coverage would not cover such a claim for financial loss. The standard Errors & Omissions coverage provided to investigative agencies today by most insurance companies specializing in the field, will only cover Errors & Omissions and other negligent acts that result in bodily injury, personal injury or property damage, but not financial loss.

If you manage or own an investigative agency that has exposure to lawsuits by clients alleging financial loss as a result of your investigative mistakes, then talk to your insurance broker immediately. Most probably, he is going to tell you that you do not presently have this coverage. If so, tell him to get it for you right away. Real professional liability insurance is available countrywide and it's no more expensive than the liability coverage you presently carry.

Wouldn't it be terrible, if after all the years that you have dutifully paid hefty insurance premiums and never had a loss, that when finally you do have a loss, your claim is denied? We are aware of a number of just such denials involving claims for financial loss. That would really be adding insult to injury.

Bruce W. Brownyard has been in the insurance business for over 30 years. He is President of Brownyard Programs, Ltd., a wholesale insurance agency that is based in Islip, New York. He has a B.A. Degree in Communications from St. Louis University and is a well known speaker and writer on the subject of insurance as it relates to the private security industry.