3 Common Errors & Omissions Claims You Want to Avoid
E&O Claim Triggers to Watch Out For
When you start your independent insurance agency, the last thing on your mind is the possibility of being involved in a lawsuit. E&O insurance is a must as it can save the day when it comes to covering costs, but still, getting sued is not nice. Lawsuits are humiliating and frustrating.
Just by being part of the insurance industry, you’re in the line of fire and are vulnerable to both fair and crazy claims. That doesn’t mean you can’t be careful not to overexpose yourself. Here are three of the most common E&O claim triggers that you want to protect your agency against:
Failure to Provide Appropriate Coverage
Did you know that close to 25% of E&O claims are due to agencies not being able to procure proper coverage for a client? This is not always the agent’s fault. There are many reasons this could happen, including a clients inability to fully explain their needs. Regardless of the reason, there are safety measures your agency should take to minimize the possibility of this happening.
- Document all binding requirements for every carrier and share that with your team.
- Keep everything in writing and keep that documentation handy.
- Make sure your insurer’s ratings align with the requirements set by your E&O carrier.
Improperly Explaining Policy Provisions
Lack of communication is always a problem and failing to communicate policy provisions to your clients is one of the most common situations that trigger E&O claims. Three basic things should happen: your agents should be able to find a way to communicate with your clients, they should be provided with proper training, and make sure your marketing materials truthfully represent your policies.
Poor Risk Analysis
Being unable to identify exposures adequately puts your agency at risk. This mostly comes down to training capable staff. Be sure to frequently test their skills and have them take risk analysis courses.