Minimizing E&O Risk for Insurance Agents
Minimizing E&O Risk for Insurance Agents08.01.2016
insurance agent, you spend much of your work day putting together insurance
plans for your clients to make sure that they have the proper coverage to
protect them in the event of any incidents. However, you need to ensure that
you have ample coverage for yourself as well to protect you and your company
from any errors and omissions claims, which can result in debilitating costs
for your company if not covered under your regular insurance policy.
Having professional liability insurance to cover E&O claims provides an extra layer of protection for you and your organization. In addition to having this additional coverage, there are a number of practices you should employ to help minimize the risk of incurring such claims in the first place:
Follow Correct ProceduresFirst of all, make sure that you fully understand the intricate details of all of the insurance options your company offers and the extents and limitations of each policy. You need to know exactly what you are providing to your clients so that you can make the best possible recommendations for their individual needs.
Be sure to follow all applicable regulations, and always employ ethical business practices. If you are unsure whether a particular action is ethical, it is usually best to err on the side of caution until you can be completely sure. When completing application forms for your clients, always make sure that each question is answered fully and accurately to prevent future complications due to misrepresented information.
Communicate with Your ClientsThroughout the entire process of developing an insurance coverage plan for a client, take the time to explain everything to the client in detail. You want to ensure that your client fully understands the products that they are getting and the scope of coverage. If a client chooses to decline a particular aspect of coverage, impress upon them the potential risks of not obtaining that coverage and what it could mean for them in the future. The last thing you want is for a client to file an E&O claim against you simply because you did not make them aware of potential complications with their policies. In the event that you must switch your client over to a different insurance carrier for a particular policy, be sure to alert him or her to any changes in levels of coverage, deductibles, or other pertinent information.
Document EverythingAs you work with your clients, both during the application process and in subsequent conversations regarding policy changes or claims, keep a record of everything that was discussed and the results of those conversations. Any time a client elects to make a change to a policy or remove certain coverage options, get it in writing with the client's signature. Having this paper trail can greatly reduce your liability in E&O claims because you will be able to prove that you provided the client with all of the information needed for them to make an educated decision and that the changes you made to the policy were at the client's direction. While it is unlikely that you will ever need most of this documentation in the future, it is best to keep track of everything just in case there is ever an issue.
By following these tips, you can greatly reduce your risk of E&O claims in your insurance practice. However, it is important to remember that we are all human, and even with the most careful application of these practices, mistakes can still happen. Any time there is a discrepancy, report it to your E&O insurance provider immediately. The faster you take action, the better your insurance company will be able to help you weather the storm.
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.