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Part 6 of a 6 Part Series: Why Didn’t This Agent Offer an Inflation Rider?

E&O Claims in Bucks CountyWhen selling insurance, you need to have more in mind than just finding the sweet-spot where you think your prospective client is comfortable with the premium.

Selling a disability policy can be compared to buying a car.  Would your client want a compact car at claim time, or would they prefer to have a luxury model? Although many E&O claims in Bucks County can stem from buyer’s remorse, it’s important that you have documentation that you took the time to offer the best options available through the insurer that you are representing and explained the differences in benefits.

After your client has selected the policy they wish to apply for, based upon the benefits they will receive at claim time and a manageable premium, it behooves you to send a letter documenting the facts that were behind their selection of a particular product and asking them to let you know immediately should they wish to make any changes before the policy is issued.

The scenario below might not have surfaced if the agent was better informed and more proactive.

SCENARIO 6

The agent sold the client a disability income policy, which provided benefits of $10,000 per month until age 65.  The client became disabled when he was 55 years old, and the insurer commenced payments under the policy.  The client subsequently learned from another agent that the insurer had offered a rider which provides for increases in disability benefits to coincide with inflation rates and increases in the cost of living.  The agent had not offered this rider to the client when the policy was issued.  The insurer would not allow it to be purchased after a disability had commenced.

The client filed a lawsuit against the agent, asserting that he was negligent in failing to offer the rider when the policy was sold.  The agent advised that he was unaware that the insurer had offered such a rider. He worked for another insurance company, which did not offer such “cost-of-living adjustment” riders to disability income policies. Following commencement of the lawsuit, the agent was surprised to learn that the insurer offered same. He admitted that he did not ask the insurer about such options at the time when the client applied for coverage.

Settlement negotiations were entered into at an early stage of the action.  The client eventually agreed to a structured settlement, which would provide extra income above the disability benefits being paid by the insurer. The agent paid $200,000.

LOSS PREVENTION TIPS

Allegations can stem from either a total lack of coverage, to inadequate limits of coverage to failure of the agent to properly place adequate insurance. Be certain that you are offering adequate coverages and riders.

Need to know more? Contact an expert in E&O claims in Bucks County to learn more about your coverage options.

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