It may seem like a study in irony, but the fact remains that even those who are in the business of telling others about how to protect themselves with the right kinds of coverage will themselves need E and O insurance for insurance agents. Considering the line of business these professionals are in, an error or mistake on their part could cause substantial financial harm to their clients. The attitude that many people have these days doesn’t help. One business owner stepped on the braked hard when he approached a car with a license plate frame threatening “You Hit, I Sue” on the back end of a fancy luxury car tooling down the highway. “It’s Beginning to Look a Lot Like a Lawsuit” is a twist on an old Christmas classic tune that some on the sue-wagon are singing, changing the lyrics to reflect how the knee-jerk reaction far too frequently whenever a problem occurs is to sue the person who allegedly caused the harm.
This potential problem became a certainty for Walter, who has been selling coverage for five years without incident. After lengthy investigations proved that one of his staff had failed to note a client’s request to raise his coverage–and a later claim failed to fully cover the event due to the policy limit remaining at the old level–the agency was successfully sued by the client.
Lawsuits accusing professionals of failing to deliver their services as agreed upon in their contract abound in today’s marketplace, and they do not exempt those who are in the business of offering the very coverage they need for themselves. Statistics show that one in three agents or brokers is hit with a lawsuit each year; that number is expected to climb even higher in just the next few years.
The pitfalls of poor practices
Procedures and processes that are well-defined, written down, and followed consistently–or rather, the lack thereof–are most frequently the cause of litigation, say experts. Failure to have complete, documentation detailing every exchange with every single client, whether face to face or via telephone or written correspondence, also turned out to be the downfall of many an agency. When it comes to E and O insurance for agents, approach things from a “physician (or in this case, agent), heal thyself” point of view and make sure that you purchase this important coverage for your own agency.