Our July E&O prevention tip focuses on the importance of avoiding vague language.
A customer requested a homeowners policy from an agent that was new to the business. The customer explained he wanted the same coverage as his previous policy but was shopping around in an effort to find a more affordable coverage. When the customer asked if he would lose any coverage by switching to the new homeowners policy, the agent assured him the new policy would provide “the same coverage as he previously had.” Later that year, the customer’s home was damaged from sewer backup was surprised to learn his homeowner’s policy did not provide coverage for sump pump failure. The agent was unaware that the customer had added an endorsement on his previous policy and failed to add the coverage to the customer’s new policy. The customer brought a claim against the agent for misrepresenting the insurance policy he had purchased.
E&O Prevention Tip:
When a customer makes vague statements, be sure to ask questions for further clarity. Customers may not know what information to volunteer so it is up to the agent to guide the conversation to help determine what exposures the customer needs coverage for.
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