Do Not Cut Corners
In an effort to expedite the underwriting process, insurance agents may fail to fully follow an underwriter’s guidelines. Do not rush the underwriting process in an effort to serve the client as this can lead to increased E&O insurance exposure. The claim example below illustrates how cutting corners contributed to an E&O insurance claim being filed against an insurance agent. Review this claim and the following E&O Prevention Tip to help reduce your E&O insurance exposures.
Description of Claim: An insurance agent wrote a homeowner’s policy for his customer. When the insurance agent went to inspect the property he was unable to gain access to the interior of the home and therefore only inspected the exterior of the home. Later that year a fire occurred in the home due to a malfunctioning pellet stove. The pellet stove was the sole source of heating for the home and therefore, was an unacceptable risk for the carrier. If the insurance agent had inspected the interior of the home, he would have seen the pellet stove and not written the policy with this carrier.
Estimated Claim Cost: $167,000
E&O Prevention Tip: Take the time to familiarize yourself with underwriting guidelines. Do not cut corners to expedite the underwriting process.