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  • Post category:E&O

As a seasoned insurance agent, you probably field numerous calls each day, most of which are pretty routine to you. In fact, sometimes they can seem so routine, you may neglect to document them the way you should. Maybe you’re getting ready to leave for lunch and decide to make your notations when you return to the office. Or maybe another call comes or you’re distracted by a question from another agent and you simply forget to write down the information in the client’s file.

Whatever the reason, the results are the same: You’re leaving yourself – and your agency – open to an E&O insurance claim that can wind up costing thousands of dollars. That’s because having good documentation is critical to establishing a record of changes or other requests or concerns voices by one of your clients so that, should an issue arise, you can show you performed your due diligence, and you performed it in a timely manner.

Think it’s not such a big deal? Here’s just one example that clearly illustrates the importance of accurate and thorough record keeping:

A few months after an insurance agent sold an auto insurance policy to a client, the client’s daughter called the agency and spoke with another agency employee. She told the employee that she wanted to remove the comprehensive/collision coverage from the policy in order to save money. The employee complied, processing the change and removing the coverage; however, he neglected to document the call and the conversation, and he also failed to contact the client who purchased the coverage initially.

A couple weeks later, the client called to make a claim following a single-vehicle accident that caused major damage to his car. The agent told him his policy did not include coverage to handle the claim. Of course, the client wanted to know why his policy coverage had changed, but because there was no documentation and no verification, the agent was unable to explain the change.

As a result, the client filed an errors and omissions claim for $17,000 against the agent. In this case, not only did the agent fail to properly document the conversation he had with the client’s daughter, but he also neglected to follow up with the name insured to verify the changes and to obtain an approval from the client.

So what’s the lesson? Be sure to document your conversations completely, especially when a change in coverage is requested, and follow up as necessary – not later, but right away before you have a chance to forget. If you delegate the responsibility to someone else in your office, document that as well, and be sure to follow up with that person.

When it comes to errors and omissions (E&O), there’s no such thing as too much documentation. Make sure you take every precaution to create a solid “trail” of proof that you’ve done all you’re obligated to do to ensure your client and your insurance agency are protected with more than just E&O insurance in the event of a claim. Of course, add the extra layer of protection that a comprehensive E&O insurance policy can provide.

Learn more about E&O insurance risks as well as discounted E&O insurance we offer for P&C insurance agents by visiting the American Agents Alliance website today.

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