Undoubtedly immediate notification of a claim should be sent to the e&o insurance carrier in order to avoid denial of coverage for the claim. Most policies do require fast notification. I have seen insurance companies deny coverage because they were not notified in a timely manner.

Most policies require that the insured allow the choice of legal counsel be left to the insurer. Although the insurer is supposed to act in the best interests of the insured, settlement of the claim may be less expensive than defending the claim...even if the insured is not liable. The question then becomes one of whether the insurance carrier is going to significantly increase the insured's future premiums because of the claim which the insurance carrier chose to settle. For this reason it is good for the insured to obtain the legal opinion of his own legal counsel so that he is fully informed in the event that the insurance carrier elects to settle the case rather than to litigate it.