Assurex E&O Plus | Do You Have a Process for Reviewing Clients’ Contracts?
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Do You Have a Process for Reviewing Clients’ Contracts?

19 Oct Do You Have a Process for Reviewing Clients’ Contracts?

Posted at 09:00h in Pearsall’s Perspective – E&O Plus Tip of the Week by

On any given day, agents are asked to review contracts/leases on behalf of their clients. The objective is to determine how well the client’s insurance program meets the requirements of the proposed contract. There are several areas for agents to be aware of when they take on this role. 

To start with, if the agency or the staff have not done this type of work before, the person(s) to whom this task is assigned should receive the proper training. There are many resources available to educate staff on what to look for. If you are being asked to review a client’s contract and are unsure what to do and what to look for, ask some of your agency colleagues. Reviewing contracts is an important issue and needs to be properly handled. The E&O Plus Operations Guide addresses this issue with many of the key issues noted. They include:

  • The review of the contract/lease should be limited to the insurance requirement of the contract — this is critical.
  • When responding to the client, the suggestion is to deliver the “findings” in writing only. However, if it is necessary for the response to be delivered verbally, you should also provide a follow-up written communication. This will allow the inclusion of the proper disclaimers to be stated.
  • On the subject of disclaimer language, the following is a sample to consider using:

“We have reviewed the contract for insurance purposes only. We are not in a position to provide legal advice, and thus our review is based on coverage in force at the time of the review. The comments made in this review are not intended to be a substitute for a review of the contract by your company’s legal counsel, and accordingly, it is recommended that your counsel review this contract. We disclaim any and all liabilities arising from this review and any final contract language.”

There are certainly some agents who do not want to provide a review of client contracts. However, this may not be possible in light of market competitiveness. By following some basic steps, a contract review will not be as scary as one may think.