Like other companies, insurance agencies are in the business of providing necessary products and advice priced competitively in order to achieve a suitable profit margin, pure and simple. But in many cases, the professional services these hardworking men and women provide have nothing “simple” about them; as it turns out, this line of work brings with it a varied and substantial collection of potential liability risks. In the course of doing business, then, it is important to ensure that a culture of risk management is cultivated so that a major irony is avoided–an expensive claim that the agency itself faces due to a grave mistake. Of course, to avoid such a calamity, agencies will want to heed their own advice and purchase insurance agent errors and omissions insurance.
Policy can protect when damages threaten your existence
In the event of a claim, the policy will pay for the costs of legal defense, as well as damage awards and settlements–amounts that can severely cripple or even obliterate a firm altogether, particularly in today’s litigious environment where claims are often substantial. That was exactly what happened to a small firm whose top producer gave a client some policy information that, unfortunately, was inaccurate. The client, who was on vacation, declined some protection offered by a rental company, believing that coverage he already had in place would extend to the rental, as he had been informed. Not so–and when the rental equipment was damaged, the client found himself having to pay thousands of dollars out of pocket to reimburse the company for repairs and loss of use. The client in turn sued his agency to recoup his loss, arguing that it would never had occurred because he would have purchased the additional rental protection had he been given the correct information in the first place.
Start with the basics
To avoid costly E&O claims and improve business practices, start on the ground level–that is, by cultivating a culture in which every member of the staff understands that the things they say and do can mean the difference between a satisfied customer and a lawsuit. Implement written processes that have been vetted for accuracy and completeness and ensure that all are trained to follow the same procedures with each client interaction. By adhering to consistent service delivery methods, you can help reduce the chance of ever having to file an insurance agent errors and omissions insurance claim.