As an independent insurance agency owner, one of your top priorities is to protect your business from Errors & Omissions (E&O) claims. With inflation on the rise, cost-conscious consumers may be drawn to less expensive policies that don’t provide appropriate coverage, leaving agencies open to the leading cause of E&O claims — recommending inadequate limits. However, there are steps you can take to avoid these claims and safeguard your agency’s reputation and financial stability.
One crucial strategy to protect your agency is thorough documentation. Ensure that all interactions with customers regarding policy limits are clearly recorded. Encourage customers to carefully review their policy documents, and have them sign an acknowledgement stating that they understand and agree to the coverage and limits. Written correspondence, such as email confirmations, serve as valuable evidence.
When discussing policy limits, consider providing information on available options with a disclaimer stating that higher limits are available upon request. This approach emphasizes customer choice and helps manage expectations.
By maintaining comprehensive records and obtaining signed acknowledgements, you can provide evidence of a customer’s understanding and agreement with their policy limits. In the event of a claim, this documentation can expedite the resolution process or even prevent a claim from arising in the first place. Demonstrating that an insured had ample opportunity to review and request higher limits will make it difficult for them to argue that their coverage was inadequate.
Protecting your insurance agency from E&O claims requires proactive measures. By prioritizing thorough documentation and emphasizing customer understanding of policy limits, you can minimize the risk of claims. Taking the time now to establish proper protocols and communication can save you significant time, money, and headaches in the future. Remember, an ounce of prevention is worth a pound of cure when it comes to E&O claims.