20 Feb Switch Your Role
From an E&O perspective, imagine you are now the client (CL or PL), not the agency professional. You purchased insurance from your agent many years ago and still have the same agent to this day. You just suffered a loss and have now been advised the loss will not be covered or fully covered. The loss is significant, so naturally, you are quite upset, to say the least. What thoughts are going through your head?
- Did you make a mistake in securing the necessary coverage?
- When you recently contacted your agent by phone, were you clear about what coverage you wanted?
- Did my agent send me anything documenting/confirming our discussion?
- Do you have any notes detailing what coverage you asked for?
- Should you have read your policy/endorsement when you got it?
- When did my agent last contact me to discuss my insurance?
These are probably just some of your thoughts and questions. You think you can recover some of the damages by bringing legal action (E&O claim) against your agent. The answers to the abovementioned questions could help or hurt your chances of bringing a claim against your agent.
Now, flipping your role to the agent, how confident are you that you will prevail in legal action? Let’s look at the questions to see what you should have done.
- Did the client make a mistake in securing the necessary coverage? Were they clear as to what coverage they wanted? For the most part, your role as the agency representative is to secure the coverage the client asked for, and if you can’t, you need to let them know. So, for example, the client wants replacement cost coverage for the contents of their home, but that coverage is not available because of the market you are using. The inability to secure the requested coverage should be documented back to the client in writing. Don’t be surprised if the client states, “You are my insurance agent; I rely on you to get me the coverage I need.” Especially when making coverage purchase decisions over the phone, these conversations must be documented in the agency system and memorialized back to the client in writing (email is certainly acceptable).
- Did my agent send me anything confirming our discussion? I can’t stress this enough – there should be documentation back to the client confirming the coverage requested. Without this, the client may allege, “You didn’t get me what I asked for.” It is now your word against theirs – your chances of prevailing are less than 50%. Don’t be surprised when the client has notes detailing the date/time they contacted your office, who they spoke with, and what they requested. One thing you don’t want is for the client to have better notes than you do.
- Should I have read my policy/endorsement when I received it? There is a good chance the client will assume the coverage they requested is what you provided and, as a result, not read the policy/endorsement. As the agency, look to find ways to encourage them to read their policy and advise you if the coverage provided differs from what was requested. If you have documentation providing this advice, it will add a positive element to the defense of your agency.
- When did my agent last contact me to discuss my insurance? While it is still heavily up to the client to request the coverage, if you have a client who suffered a loss and can state that they have not heard from their agency in many years, the courts will not look positively on this. This is why the renewal questionnaires are so important. Even if none are returned, the fact that you asked them, “Has anything changed?” means this lack of client accountability now puts them more on the defensive and increases the agency’s chances of prevailing.
Often, the difference between winning and losing in an E&O matter is in the details and in taking the extra few seconds (many times, that’s all it is) to do the little things. Memorializing the client’s purchase decisions is extremely important. Hopefully, this is part of your process and procedures. If not, now is a good time to start.