COVERAGEDECREASES

This is an instance where it’s important to overcommunicate with your insured. Explain to them exactly what they will be getting under the quote proposal and how it compares to expiring –including and especially any areas where the coverage is being decreased. Be sure to include any increases in retention caused by coinsurance, decreased limits, etc. in your proposal and get a signature – more on that below. If you are unable to secure a quote for the full, expiring limits, be upfront and explicit about that in your quote proposal. As an agent, you do NOT have a legal responsibility to fully assess the client’s insurance needs or to secure sufficient coverage to provide full coverage. You DO have a legal obligation to inform the policyholder of what they are buying when you present a quote, and best practices are to also state that additional coverages or higher limits may be available. But if the amount you are proposing is the highest limit you can muster, that’s important to tell the insured as well.

It is also important that, as an agent, you don’t RECOMMEND buying lower coverage limits. While it may be a necessity in certain cases, that should be a decision made by the policyholder, not prescribed by the agent. This can sometimes feel disingenuous or self-serving, but it is not only an important protection for you against E&O lawsuits, it’s the right thing to do for the policyholder. An agent telling an insured that they SHOULD buy a lower limit is virtually a guaranteed payout on an E&O claim if a loss exceeds the policy limit. The policyholder is, likewise, relying on you to inform them of what is available on the market. But it is up to the insured to decide how much limit they need.

Get a signature

This is a natural part of the documentation, but it’s important enough to have its own section! When you present your formal

Continued from page 15 proposal – and if you aren’t using a formal proposal beyond the quote proposal provided by the insurer, you should create one, but that’s perhaps a topic for another day you should include space for them to acknowledge any coverage decreases. Anywhere that the quoted coverage is less than expiring, you should get a signature to enshrine in writing that you made the policyholder aware of the decrease and they made the decision to accept it.

This is an exceptional defense if ever you should find yourself in an E&O suit. Cases often come down to “he said” “she said.” If you can then show that the policyholder was distinctly aware of the change, and that they acknowledged their decision to decrease coverage by signing the proposal, your defense team will go into court with big smiles on their faces.

Bonus E&O Tip: Time to cross-sell flood!

This is unrelated to my main topic, but let me drop in a bonus tip. Hurricane season is coming, and you have some clients that don’t have flood insurance. Take a few minutes to cross-sell that line, and you’ll not only round out your accounts, but you’ll have a good E&O defense if one of your uninsured clients gets flooded. Again, being able