13 Aug “You Have Enough Coverage”
It is amazing how often I have heard real-life stories about agency staff/producers telling clients they have enough coverage. When one stops and thinks about this issue, as smart as we all are, can we say with 100% confidence that the client has enough coverage to handle any claims/losses they may face? One of the reasons I hear about these stories is because they often become E&O claims when the client suffers a loss that is not fully covered. They are looking for someone to blame and as their agent, you are probably the first place they will look. Winning these E&O claims is extremely difficult when the client has documentation of a conversation with your agency advising them that “they have enough coverage.”
Here are a few of those stories:
Nail Salon: The client has a BOP with $1 million liability coverage and no umbrella. The client did not buy an umbrella because they were advised that $1 million of liability was “more than enough.” One of the nail salon patrons got an infection from a procedure. This infection spread to the point that an amputation of the foot was necessary. They sued the nail salon for $1.75 million. The nail salon sued the agent for not having enough insurance. Guess who won that case?
Public School: The client has a $5 million umbrella. When the account comes up for renewal, they ask the agent if they have enough coverage. They are advised that $5 million is what most schools have, so “they should be fine.” Fortunately, I don’t believe anything came of it.
Commercial Account: The client has a $3 million umbrella, and when the account comes up for renewal, the client asks the producer, “Do I have enough coverage?” Based on their experience, the producer advises that he has never seen a claim for over $3 million, so they should be ok. The client takes the producer’s word and continues with a $3 million umbrella. As fate would have it, the client suffers a significant loss where the $3 million of coverage leaves the client with a tremendous uninsured exposure. The agency is subsequently sued and loses in court.
These are just a few of the scenarios dealing with this issue. I am surprised that a client could be advised that they have enough coverage. Court awards are increasing, and these present solid opportunities for an agency to offer clients options for higher limits.
I see the perspective that you are of the firm opinion that the amount of coverage the client has is probably enough. However, having stated that, the best response should be, “It is difficult to state that the amount of coverage you have will be sufficient to fully cover any claims you face. With court awards increasing, let me provide options for higher limits. This should assist you in making an educated decision.”
Client accountability should be a solid foundation principle in your agency. The bottom line is that the client made the decision at the end of the day, not you. When you tell a client that their coverage should be enough, aren’t you making the decision for them?
How would you respond to a client asking if they have enough coverage? Your answer is more important than you think.