Understand Client Needs
Insurance agents must have a thorough understanding of the client’s coverage requirements in order to provide an insurance policy that will best fit the client’s needs. E&O claims often arise from a lack of understanding between insurance agents and clients with regard to coverage requests. The claim examples below illustrate how a lack of coverage contributed to an E&O claim being filed against an insurance agent. Review these E&O claims and the following E&O Prevention Tips to help reduce your E&O exposures.
Description of Claim:
The insurance agent was asked to obtain full coverage for his client’s home. The insurance agent wrote a homeowners policy and obtained a separate policy to cover the insured’s home for wind. The home had a pool and pool enclosure which were included in the homeowners policy. However, the insurance agent was unaware that the wind policy required a separate policy for the pool enclosure. The insured’s home was destroyed in a hurricane and the insurance carrier for the wind policy rejected coverage for the pool enclosure. The insured thought the wind coverage worked like the homeowners policy and the insurance agent never informed him he was required to have a separate policy for the pool enclosure.
Estimated Claim Cost: $16,400
Description of Claim:
The insurance agent was asked to obtain full coverage for his client’s home. The agent wrote a homeowners policy and obtained a separate policy to cover the insured’s home for wind. The home had a pool and pool enclosure which were included in the homeowners policy. However, the agent was unaware that the wind policy required a separate policy for the pool enclosure. The insured’s home was destroyed in a hurricane and the insurance carrier for the wind policy rejected coverage for the pool enclosure. The insured thought the wind coverage worked like the homeowners policy and the insurance agent never informed him he was required to have a separate policy for the pool enclosure.
Estimated Claim Cost: $145,700
E&O Prevention Tip:
Know your products. Take time to talk with your client(s) to ensure you understand all their needs.
