07 Jun Statement of Values Form – Is the Signature That Important?
One issue I have mentioned numerous times on this blog (because it is very important) involves securing a client’s signature on an application. This practice has tremendous relevancy and importance because typically, in a dispute, the courts would hold the client responsible for the contents of an application if the client signed it.
The same issue essentially applies when dealing with a Statement of Values form. A Statement of Values is a form submitted to an insurer that outlines and details the various properties insured. The details will include the risk insured (building, equipment, stock, etc.), the value of each piece of property, and often the method used to calculate that value. The form is typically used on commercial risks, although it has its place in some personal lines coverages.
Completing a Statement of Values form is important since it is one of the tools used to determine the premium. For agents and brokers, this will also help determine whether the appropriate property limits are adequate to avoid any issues at the time of a claim.
So, needless to say, a Statement of Values form is important and thus should be (actually must be) accurate and detailed, as necessary. Another key issue is that the client should sign it.
Take the scenario that a property loss has occurred involving a property policy where a Statement of Values was submitted but not signed. There is a dispute on the values, and the client alleges that the limits were not adequate, causing them some financial hardship. The client further states that they never signed the form. The agent could have a little explaining to do, and there is the possibility that an E&O claim could develop.
Take that same scenario but in this situation, the client did sign the form agreeing to the accuracy of the coverage including the limits. Since the client signed the form, they will typically be held responsible for the contents of the form they signed. The outcome in this scenario will be much different than the previous scenario.
One of the E&O Plus audit questions involves this exact issue: Client signatures on statements of value and business income worksheets. The expectation is that if SOVs or BI worksheets have a signature line on them, insureds must sign, and documents are to be retained in the file. One signature per document (not per page) is acceptable. Electronic signature platforms are more readily used, so an electronic signature is acceptable.
If the Statement of Values form does not require a signature, it would be prudent to provide the client with a copy of the form and require their acknowledgment and to advise if any of the information is incorrect.