Writing an insurance policy and closing a sale may feel great, but remember: No transaction is truly complete until the application and payment are processed. While in most cases, policies are filed in a timely manner without delay, it’s not unheard of for policies and payments to be set aside and forgotten about in the course of other duties. Distractions like unexpected phone calls or client visits, or even something as simple as postponing processing until the next day or after lunch can mean an application becomes misplaced or overlooked.
When business is especially brisk and you find yourself handling more tasks than you normally do, errors like misplacing an application often become much more common. If a client winds up making a claim while their application is still stuck under a pile of papers on your desk or sitting in your briefcase or on your desk at home, you could be held liable for any damages that occur. Here’s an example that illustrates just how real the consequences can be:
After meeting with a client in his office, an agent accepted the client’s completed and signed policy application as well as his payment, placing both on top of a small pile of papers on his desk. His intention was to finish filing the policy and payment after lunch. While delaying filing for a short period – for instance, the time it takes to have lunch – had never caused a problem in the past, as the saying says, there’s a first time for everything. In this particular case, while the agent was at lunch he received a phone call informing him of a family emergency that required his immediate attention. The application and payment were forgotten, and the agent returned home where he remained for the rest of the week. Once he returned to the office, the folder had become buried under paperwork that had piled up on his desk during his absence. Catching up on missed work kept the agent busy, and he completely forgot about the unfiled policy application and payment.
Shortly afterward, a tree branch fell on the client’s roof, destroying a major portion of the client’s home. When the client attempted to make a claim and learned that no policy was in effect, he made a claim against the agent for failing to process his application, receiving damages of $33,000.
The moral here is that it’s critical to make sure that all applications and payments are submitted for processing as soon as you receive them. If you can’t submit them yourself, ask a colleague to do it for you and then follow up with the insurance provider to ensure it’s been done. Above all, don’t provide the client with any confirmation of coverage until you know the transaction has been completed.
As an insurance agent, make sure you have adequate E&O insurance coverage so you can properly manage a potential claim that could have serious financial repercussions for you or your agency. The American Agents Alliance has a very affordable, admitted, and broad coverage E&O insurance program for property & casualty insurance agents. Get an online quote in 10 minutes or less right here.
