General Exposures and E&O Insurance for Insurance Agents
Insurance agents understand all too well the many challenges they face when selling their services and products to consumers. A misplaced word here, an exclusion of important information there, and they can end up in a court defending their actions, and could ultimately end up paying out a large settlement for an unfortunate and unintentional error.
E&O insurance for insurance agents can help with the burden of litigation should a customer decide that they are unhappy with the results of either their purchase, or an incident that took place for which they believed they were covered, only to discover that they were not.
Types of concerns and exposures faced by insurance agents
One example of a routine exposure many agents face has to do with quote sheets. The exposure lies in the possibility that, if one customer service representative (CSR) uses a quote sheet that does not ask an important question, and this results in an insured not purchasing adequate coverage, whereas another CSR’s quote sheet would have asked the appropriate question, an invariable practice standard has been violated. The plaintiff attorney would point this out in a court of law and there would be little or no defense against the accusation.
Another area of concern is when a CSR ends up being behind on a client’s policy renewals, which can create significant E&O exposures, such as missing errors and making mistakes in an attempt to try to rush through the process or, even worse, delivering their policies late. If a policy is delivered late, any “duty to read” responsibility on the insured’s part is heavily diluted.
An agency’s Standard of Care requirement is a complicated matter in itself, because the applicable standard is case and fact specific. When an agency charges fees in many, and probably the vast majority of jurisdictions, it elevates its Standard of Care requirements considerably. A key to meeting this higher standard likely involves new procedures and much tighter monitoring of whether these procedures are being followed in order to avoid situations that could result in litigation. These are prime examples of why E&O insurance for insurance agents is a necessary and vital product to have.