Common Errors and Omissions Claims Against Insurance Agents
A common question asked by insurance agents is about whether claims handling can cause an errors and omissions (E&O) claim. The very short answer to this is “yes”. Claims handling is a significant issue when it comes to insurance agent professional liability, or E&O. It’s currently projected that approximately 10% of all errors and omissions claims are due to alleged mishandling of the underlying claim by the agency. So the question is, what are common errors and omissions claims against insurance agents?
One of the biggest errors and omissions claims against insurance agents is improper coverage interpretations. This can happen when an agent doesn't report a claim because they assume it won’t be covered when in fact it would have been. On the other hand, and agent can face a liability claim if they advise that there is coverage when there isn’t.
Another common errors and omissions claim stems from the failure of an agent to advise all applicable carriers of the submitted claim. It’s best to advise all applicable carriers, especially any excess or umbrella carriers. This will give them the opportunity to conduct their discovery on the matter.
Failure to handle customer requests is another frequent errors and omissions claim against insurance agents. Customer requests may involve estimates, appraisals, etc. As an agent or broker, you should make sure that any requests for additional information are handled promptly and professionally. This will help the carrier resolve the claim in a timely manner.
The manner in which insurance agencies and brokers are structured to handle claims varies. However, most agents should want to be involved in claims from their customers. This provides the opportunity to show the agency’s strength and demonstrate you are there when customers need you. Just remember that it is imperative to exercise caution at claims time. This is an emotional time for your customer, and the agency must avoid advising customer to the detriment of that customer.
At PL Risk Advisors, we understand that running a professional services business exposes your clients to extraordinary liability risks. An Errors and Omissions (E&O) Insurance policy provides your clients with coverage that contributes toward legal defense costs, damage awards and settlements. Please contact us today at (855) 403-5982 to learn more about what products we offer to Insurance Agents and Brokers as well as a number of other professions.
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