E&O Prevention for Insurance Agents & Agencies
E&O Prevention for Insurance Agents & Agencies10.19.2022
today are glad to bring a lawsuit against a company for the smallest reason or
for what they think is a legitimate reason. If you or your agency provides them
with a reason, even casually, you may find yourself in court. Errors and
Omissions, or E&O prevention is not an option for insurance agents and
agencies; it is an essential for solid risk management. Here are some steps to
take to reduce E&O causing problems.
Inform Each Staff Member
Effective prevention starts when insurance agents become especially aware of what can lead to an E&O. Being educated about what might trigger an E&O lawsuit is the first step in being able to avoid them. Not only should the agents be informed about possible trigger events, but also the secretaries and anyone else in the office that deals with the public or with clients.
Develop Policy Procedure Manuals
Make sure everyone in the office is on the same page for preventing E&O by putting all procedures in writing. Then, ensure that each staff member and all agents are familiar with those practices, and notified immediately when updates or new practices are to be implemented.
Evaluating the Needs of Clients
Agents need to ensure that they take time to learn about all of the client's assets so that the right amount of risk management can be determined. More than half of the E&O cases stem from a failure to provide the right amount of coverage. This problem can be eliminated if agents would take more time to understand the client’s needs and write them down.
Another effective way to help reduce claims of E&O is to be sure to document everything that takes place between clients, agents, and staff. Information needs to include time and date of the call, the names of client and agent, overall nature of the conversation, action needed, and a note of completion when the desired actions are taken. If a lawsuit should arise, the lawyer will ask for a copy of all documentation about the client.
If a particular coverage is suggested and then declined, get the client to sign a statement to that effect. Have the spouse verify it, as well.
Add electronic documentation to the office, too. Put everything on the computer so that it can be easily found again when needed.
Attend E&O risk management seminars. This is not only for agents but also for staff members. Seminars are a good way to keep everyone informed and reminded of the potential problems that can lead to an E&O lawsuit. Instructors can provide reinforcement to the agency's need to stay alert to potential problems.
Encourage Clients to Verify Policy Contents
Once a policy is delivered to a client, have them review it and confirm in writing that it is what they wanted. If there are any questions, have them contact the agent immediately for clarification.
Detail Property Carefully When Involved
When property is involved, be sure to physically drive by and look at it. Do not take a client's word for its condition. This is especially true when dealing with another insurance company and they want an evaluation. Agents need to cover themselves by carefully describing the property and making sure that they add in any problems seen. A claim later may be paid by an insurer, but they may turn around and sue the agent if the information given is in any way misleading.
Be Careful about Binding
If you do not have the authority to bind, make this clear to the client. Do not let them think they are covered if they are not. This has led to many lawsuits in the past.
Problems with E&O can often be prevented by being careful and following established rules in the office and in the field. It is true that having better information is safer. Proper training and keeping up with new recommendations given in seminars is a great way to stay ahead of potential legal problems.
All information provided in this blog is for informational purposes only. The sources used are presumed accurate. CalSurance Associates, Brown & Brown Program Insurance Services, Inc. and Brown & Brown, Inc. will not be liable for any errors, omissions, losses, injuries or damages arising from its display or use and will not assume responsibility for any misguided information. No guarantees are implied.