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2014: 080114 E&O loss control resources for IIABNY members and IAAC insureds

August 2014 -- The E&O Report

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August 2014
Volume 26, Number 9

Recording Devices — Are You being Recorded?

During the past decade, we have encountered an increasing number of situations where insureds have secretly recorded conversations with their insurance agent or broker and then use the recorded conversation to support an errors and omissions claim or lawsuit. Since most of us are now using smartphones, the ability to surreptitiously record telephone calls and in-person meetings is very easy. (Yes, there are apps that allow you to record telephone calls and conversations with your iPhone and/or Droid.) As a result, we expect that the recording of conversations with agents and brokers, as well as their use in errors and omissions claims and lawsuits, will become increasingly common. The purpose of this issue of The E&O Report is to advise you as to the law in New York with regards to secretly recorded statements and make you aware that your conversations might be recorded and could be used against you.
One Party and All-Party Consent States
Under federal wire-tapping laws and state laws in all states, it is illegal for a person to record by electronic means the conversations of others without their knowledge and permission. Accordingly, you are not permitted under the law to secretly record a conversation when you are not a party to the conversation.
In New York, a person who records or listens to conversations of others by mechanical means, without the consent of at least one party to the conversation, might be guilty of eavesdropping, which is a Class E felony in the State of New York. If consent is not obtained, recording or listening secretly to a private conversation of others is only permitted pursuant to a lawful eavesdropping warrant issued by a judge or magistrate. Such illegally recorded statements or any testimony concerning the recording or eavesdropping would likely be excluded from evidence in any trial in the State of New York.
Federal law and the laws of many states, however, allow a participant to record their conversation with another party even without the knowledge or permission of the other party.
With regard to the recording of conversations, New York is what is referred to as a “one-party consent” state. This means that in New York, only one party to the conversation needs to consent to the recording of the conversation. The other parties to the conversation do not have to be advised that it is being recorded nor consent to the recording. Accordingly, in New York, you can secretly record your conversation with another person, so long as the other person is also in the State of New York.
You should be aware, however, that a number of states are “all-party consent” states.
In those states, you must have the permission of all parties before recording a conversation. Examples of some nearby “all-party consent” states are Connecticut, Pennsylvania and Massachusetts. Telephone conversations between a person in Connecticut and a person in New York would require the permission of all parties to the conversation before it can be recorded because one of the parties is located in an “all-party consent” state. Although legal in New York, it would be illegal in Connecticut to secretly record a conversation with another person without their knowledge and consent.
Recordings obtained illegally will probably not be admissible as evidence in an E&O lawsuit. For example, New York courts have suppressed a husband’s evidence of telephone conversations he recorded between his wife and third parties that were recorded in the marital residence. Similarly, an employer in New York is not permitted to secretly record conversations that their employees have with third parties. Such conversations can only be recorded if the employer first notifies employees their conversations are being recorded or monitored.
As the technological ability to record conversations becomes easier, insurance agents and brokers should be aware recordings could be used in support of an E&O claim or lawsuit. Accordingly, in your conversations with insureds, do not misrepresent or exaggerate the scope of coverage and/or the likelihood that a claim will be covered. Use the same care in discussing coverages and claims you would have used in corresponding with insureds. Do not make “guarantees” or “promises” to your insureds concerning the actions of insurance companies.
Finally, use your common sense. If you feel a conversation is going into uncomfortable areas and you are being cornered into making admissions, trust your instincts and end the conversation as quickly as possible. Be careful about making any statements that could be misconstrued, misunderstood or twisted by an attorney during a subsequent lawsuit. The prudent insurance agency and brokerage that follows these simple rules is less likely to face a situation where a recorded conversation will be used against it in connection with an E&O claim or lawsuit.
Submitted by:
Stephen C. Cunningham, Esq.
Keidel, Weldon & Cunningham, LLP

Keidel, Weldon & Cunningham, LLP concentrates its practice in the defense of insurance agents and broker’s errors and omissions claims and litigation, errors and omissions loss control counsel and education, insurance coverage analysis and litigation and insurance regulatory matters. Please direct any comments or questions to James C. Keidel, Esq. by mail to the main office of Keidel, Weldon & Cunningham, LLP, at 925 Westchester Avenue, Suite 400, White Plains, NY 10604, telephone at (914) 948-7000 or e-mail at The law firm also maintains offices in Syracuse, New York; New York City, New York; Wilton, Connecticut; Fair Lawn, New Jersey; Warwick, Rhode Island and Philadelphia, Pennsylvania.
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