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If you’d like to have an E&O claim, make sure you…

Best seller ribbon awardOnly advise your clients and potential clients what is covered under their policy; they do not need to know what their policy excludes.

Research has shown that clients and potential clients are more interested in what is not covered by their policy than what is. A good practice is to provide specimen policies and riders with proposals. This will help clients and potential clients have a better understanding of their policy benefits. This will also allow the client or potential client to identify any concerns. By furnishing this information, clients and potential clients may ask you to sell them additional protection.

Sell your clients and potential clients what you want them to have and do not ask them what they actually need.

Failure to provide proper insurance is one of the top causes of errors & omissions claims. Be sure to conduct an analysis of your clients’ insurance needs and what they hope to accomplish by having you handle their insurance. Have the client or potential client sign-off on any insurance recommendations you make which they elect not to purchase.

Only offer your clients the lowest benefits available, if they want the lowest premiums available.

Not offering comprehensive benefit options is another leading cause of claims. Be sure to offer your clients and potential clients different benefit options and let them select the appropriate insurance for their needs.  Premium is only a small part of the insurance planning process.  It is important to take extra time with prospects who are seeking a cheap alternative to make sure they know what their decision could really end up costing them. Being sure to have the client or potential client sign-off on benefits that were offered or suggested and not purchased is an excellent loss control procedure for any agent to routinely practice.

Never worry about writing business in a state where you are not licensed. Who is going to verify that you are properly licensed? Referrals are great, but sometimes a 05client may refer you to a prospect that lives in a nearby state.

You cannot write business in a state in which you are not licensed. Make sure that you have a proper license when discussing insurance with any prospect that is not located in your home state.  Failure to do so could result in fines and disciplinary actions.  Such fines and actions could result in your inability to renew your E&O Insurance. Posting a notice on your Web site, if you have one, of the states in which you do business is a good idea.

Skip documenting your client files. After all, it is your word against the client or potential client and who will the courts believe?

One of the best defenses against an errors & omissions claim is proper documentation. Although documentation can seem time consuming, having proper documentation can reduce the possibility and/or severity of a claim more than anything else.

Put yourself out as a market expert, even if you are not.

Unless the client has an uncovered claim, they will not know that you did not know much about the product you sold them. Be sure you know and are comfortable with the products you are selling. Keep abreast of market and product changes, attend insurance company sponsored seminars and be sure you can answer benefits questions for your clients or potential clients.  If your client asks a question and you aren’t sure of the answer, make sure you tell them you will get back to them rather than guessing.

Don’t worry about an Insurance Company’s A.M. Best Rating or Financial Strength.

Again, unless a client has a claim, how would they know the insurance company does not have the financial resources available to settle a claim. Be sure you are doing your due diligence and reviewing the A. M. Best ratings and financial strength of the carriers you are representing. Also be sure to monitor this information on a regular basis to be certain no changes have occurred in the marketplace.  If a downgrade takes place with an insurer whose products you’ve sold, be sure to notify each client in writing and be prepared to suggest sound alternatives, if need be.

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