Significant Information Related to E & O Insurance Claims

Insurance claims in agents should have enough insurance to avoid costly errors and omissions. Moreover, an insurance agent’s mistakes can lead to errors and omissions claims. It’s important to give your clients the right insurance coverage, but your agency also needs the right E&O and small business insurance.

As a result, take steps to protect your business from these six common reasons for errors and omissions claims against insurance agents

Failure to Maintain Appropriate Coverage

A good client-agent relationship depends on the client trusting you to monitor their insurance coverage and offer financial advice. Still, there are some situations in which you might not get the right insurance. In that case, if there was a loss, the client would have to pay for the damages.

If the client thinks you did something wrong, they could sue you. A large number of E&O claims against insurance agents come from cases like this. 

Check each client’s needs to make the right insurance suggestions.

Additionally, if a client’s desired coverage isn’t available, let them know immediately and suggest alternatives.

Write down and keep track of everything you say and do. If a client says no to a policy, you should write it down. However, send a follow-up email after a conversation to clarify what was agreed to. Keep these records even if you no longer work with that client.

The agent has to make sure that the coverage is with a company that can pay its bills. Use AM Best Rating Services and other information sources to keep an eye on how solvent a carrier is.

Not Giving the Right Explanation of Coverage

You’re on the right track to protect yourself from E&O claims if you’ve done the above. There are a few more things you can do to ensure your clients understand their coverage:

Before a client buys a policy, make sure they understand all of the terms and limits. Ask a client if they have any questions as you go over a policy. Tell the person renewing a policy if the terms have changed or if a premium is due. Review and update your marketing materials often to make sure they tell the truth about the insurance policies you sell.

Administrative Errors

When you use different software programs for new policies, maintenance, and renewals, mistakes are more likely to happen. Reduce the number of people who work with a client to reduce claims against insurance agents.

In “Telephone,” information is passed by whispering in someone’s ear. By the time the message gets to the last person, it is always wrong or has changed. Information is whispered in “Telephone.”

The more people who share information about a client, the more likely it is that someone will make a mistake. In addition to, assign agents to specific clients and have them handle every step of the process, from the first consultation to the purchase and ongoing maintenance.

It’s important for an agent to keep his or her staff up-to-date on the policies they sell. Professional development opportunities, like continuing education classes from companies like WebCE and Noble Continuing Education, can help agents learn about new and old insurance products and stay up-to-date on them. All agents need to know everything there is to know about a product before they can talk to a client about it.

Failure to Identify Exposures

Because they don’t analyze risks well, agents often face E&O lawsuits. This problem shows that producers need to learn more. Make sure your agents and agency are safe by:

  • Putting new hires through tests to see how good they are at analyzing risks
  • Employees must take risk analysis courses.
  • Finding tools to help producers assess the risk of their clients

Not Telling People About Policy Changes

Agents must notify clients of policy changes. However, this could include a notice of renewal or a change in the insurer’s finances that would affect its ability to pay a claim or keep the policy in place.

Not Giving an Insurer Correct Information About a Client

Don’t forget that there are three important ways to get information:

  • The client’s agent.
  • From the customer to the agent
  • The insurance company’s agent

Set up a way to do the following regularly:

Keep an eye on claims. When a claim is made, agents should follow up with both clients and insurers.

Monitor your carriers’ loss ratios. Patterns in an industry can help you predict problems and when updates or changes will be needed.

Tell the insurance company about every claim. If a client calls you first when a loss happens, your most important job at that moment is to either tell the client to call a claims manager or send the claim information yourself. No matter what, keep track of the claim and make sure it is dealt with quickly and correctly. 

By keeping these ideas in mind as you build and maintain relationships with your clients, you can not only give them great service, but you can also reduce the risk of insurance agency claims against you.

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