Negligence lawsuits against the insurance agents are not uncommon, but after the Covid-19 crisis, these lawsuits have spiked. For example, as per reports, Louisiana alone witnessed 800 such lawsuits in the last eight months of 2020.
Despite the negligence being non-intentional, an agent is still liable if their client fails to obtain the coverage for which they were insured. Therefore, you need to take adequate precautions so that you don’t end up facing lawsuits.
Here are some measures that you should take to save yourself from negligence lawsuits.
1- Know Your Legal Responsibility
Almost all the States Laws in the USA make insurance agents liable for securing the coverage of their clients that they demand. For example, here is what Louisiana State Law postulates:
“An insurance agent owes a duty of ‘reasonable diligence’ to [its] customer,” which “is fulfilled when the agent procures the insurance requested.”
The responsibility is on you to obtain the insurance coverage they specifically requested. If you fail to provide the coverage, you are liable for the damages even though the client read and signed the policy terms and conditions.
2- Your Knowledge Can Save You
As an insurance agent, you are supposed to be an expert who knows everything about the policy. Especially if you provide expert advice, you should know all the conditions and legal consequences. Always ask these three questions.
1- Which policy will sufficiently provide the requested coverage
2- What conditions can lead to non-coverage?
3- What does your client needs to know about the policy
The policy that can provide your client with the demand coverage should be understood. Make sure you know the conditions that can lead to the coverage being denied. It is also important to know the company’s policy, its reputation, and its financial situation. You will be selling the wrong policy to the people if you do not pay attention to these important questions.
Having complete knowledge about all different policies is very difficult, but narrowing it down can help you. In narrowing down, instead of working with different types of policies, you specialize in a few. For instance, you can specialize in insurance agent EPLI or any other lucrative policy type.
3- Ask Your Clients to Read Policy Terms
Although you are mainly responsible for any non-coverage issues, it is best to advise your client to read the policy terms carefully. When they read the policy terms and coverage, they might find certain points that they would like to get clarified .This will provide you an opportunity to shift the burden of responsibility towards them. This way, they will also feel guilty if the unimaginable happens and might not sue you.
4- Never Misrepresent or Hide
The agents who fall to malpractices might win clients in the short term but will have dire consequences in the future. Therefore, always following professional ethics will build a great reputation that will help your business in the long run. It would be best if you never hid or misrepresented any policy term. If you are found guilty of this, it will damage your case. If you think certain points can get overlooked, especially highlight those points. Therefore, you cannot be blamed for omitting important information.
5- Get Written Coverage Request From Clients
Since it is your legal responsibility to get your clients the coverage and insurance they demanded you. You should ask them to express what kind of coverage they need. Also, get their demand coverage in writing. This will help you in two ways. First, you will be better positioned to get them the policy that best covers their expressed demands. Second, you have written proof of their coverage request.
6- Communicate Clearly and Thoroughly
It has been found that most of the negligence is not deliberate but the result of lack of communication or, in technical terms, non-disclosure. When a client comes to you, he comes with a vulnerability that needs to be protected. Your best course of action would be to talk to him in-depth. Attempt to find out what kind of coverage he is looking for. As soon as you onboard a client, make sure you communicate all the details clearly. Specify exactly what they’re paying for and what they’re not.
Certain conditions can result in non-coverage. For instance, a building will get no coverage if it does not have a fire safety system in place. It would be best if you communicated all these conditions to the client. And keep reminding them to comply with the terms to save inconvenience later.
7- Due Diligence in Documentation
Another cause of failure in securing policy coverage is wrong or incomplete documentation. First, it is the agent’s responsibility to help your client with documentation. If anything goes wrong, you will be held responsible. Therefore, make a checklist of all the documentation processes. Have the documentation peer-reviewed, so nothing can go wrong.
About IPRO Agency Insurance Services
IPRO Agency Insurance Services is a specialty insurance brokerage with the expertise to protect your firm, assets and to help you retain clients. Our services offer all types of professionals the protection they need so they can stay committed to their work with ease. We are connected with leading insurers to bring you the best coverage for your unique needs and areas of risk. Get in touch with us at 888- 673-8039 so we can begin to safeguard your success.
