As an insurance agent, there is no such thing as over-communication. By taking the time to communicate with clients, you not only protect yourself from an error or omission, but you also retain clients who trust you and appreciate being well informed. The claim example below illustrates how a lack of communication contributed to an E&O claim being filed against an agent. Review this claim and the following E&O Prevention Tip to help reduce your E&O exposures.
Description of Claim: An insurance agent bound coverage on a 4-unit apartment complex on 10/1/2012. After inspecting the property, the carrier canceled the policy, effective 11/01/2012, because the apartment was undergoing major renovations, had no heat, water or gas and transients were living within the property. The agent received notice of the cancellation but took no steps to procure replacement coverage. On 2/4/2013, the agent’s office issued a certificate of insurance to an escrow company showing that coverage was in force from 8/1/2012 to 8/1/2013. On 2/27/2013, the apartment building caught fire when a transient started a fire within the structure. There was no policy in force on the date of loss.
Damages: $92,365
E&O Prevention Tip: Make your client aware of any policy changes or lack of coverage. If a carrier cancels coverage, be sure to inform your client immediately. As the agent, make it your responsibility to communicate pertinent information between the carrier writing coverage and your client.
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