David Thompson of the Florida Association of Insurance Agents (FAIA) is a premier insurance agent educator who spends most of his time on the road teaching insurance agents how to ply their trade. This morning, I was on a panel moderated by Thompson, with insurance agent defense attorney Jessica Kirkwood-Alley and insurance expert Brent Winans. The topic was how insurance agents can avoid errors and omissions claims.
I was asked to share a top five items which Florida insurance agents should be concerned about regarding errors and omissions, and I listed the following:
- Pick you customer and de-select bad customers. The customer or client that is always late with a check, questioning you and then not following up and whom you wonder is worth the hassle of being a customer is one type of person knocking on my door when there is a coverage gap or lack of coverage.
- Read what you sell before you sell it. This is especially true of surplus lines policies which have numerous endorsements and custom language which has major impact on the coverage product you thought you were selling. The forms are constantly changing and it cannot be assumed they are the same from year to year.
- Put in writing the suggestions to purchase excess liability and umbrella insurance—especially for property damage limits which are often lower than personal injury limits but can easily have far higher value. The amount of limits are always big negligence issues and making the customer aware in writing of the need to purchase sufficient limits is very important.
- Condominiums and Apartments—sell the insurance required in the by-laws or financing agreements. Every condo has a set of bylaws which explicitly explain what needs to be purchased and items are often not covered because they are excluded property, or the risk excluded such as wind driven rain. Apartments are usually financed, and the finance agreements usually require certain insurance amounts—and sometimes on such things as mold. Ask for by laws and insure to bylaws. Ask for financing agreements and sell at least to what is required. Deductible buy down insurance should be suggested to all condos if there are large deductibles. Watch for enough Law and Ordinance Coverage for these large structures older than 20 years—the building codes have changed a lot and create large gaps for older buildings.
- Flood insurance—suggest in writing excess flood insurance if the building or contents is valued at more than what national flood insurance will write. New private policies also will insure commercial structures at Replacement Cost and are sometimes cheaper than national flood or provide greater coverage. The policyholder can turn it down, but they have to know about it.
Brent Winans provided a paper, Articles to Help Agents Avoid E&O Claims, which insurance agents and brokers should read. Indeed, I would strongly suggest those involve with claims handling read the articles listed in this paper.
In an ever more affluent society, insurance becomes a more important product. Insurance allows people and businesses to finance risk and becomes an important aspect of everyday life. We cannot finance homes, cars, boats, planes, inventory, equipment, construction and virtually any commercial investment without securitization of the assets, revenues and expenses without insurance. Insurance agents sell these important financial products. The better they do their job, the greater the financial safety net is spread. I believe in the insurance product and support the efforts of insurance agents trying to be the best they can.
Thought For The Day
Insurance is the only product that both the seller and buyer hope is never actually used.