Our March E&O prevention tip for insurance agents focuses on the importance of being an expert in a particular market.
A customer’s long-time client, who recently became a business owner, requested business insurance for the new company he had formed. The agent had helped the client in the past with his automobile and homeowners insurance needs but had no previous experience with business insurance. Regardless of his lack of experience, the agent sold the client a Business Owners Policy. Later that year, the customer had a loss of power leading to a large spoilage claim. The client subsequently reported a claim and was surprised to learn his Business Owners Policy did not provide adequate business interruption coverage for the claim. The client alleged that his agent did not provide adequate coverage for his new business and was not knowledgeable as to what coverage was appropriate for his business.
E&O Prevention Tip:
If you do not have the expertise in a particular market, consider reaching out to an expert to assist you. Otherwise, consider turning the customer over to someone who is equipped to provide appropriate coverage. It’s better to walk away from an account than to have an E&O claim brought against you.
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