Why Do Insurance Agents Need Professional Liability?
General Liability insurance is another policy that you should have, and while it may sound like it would cover ALL liability it does not. Your Errors & Omissions or Professional Liability is not covered so you need to be sure to purchase this critical policy separately. There are so many scenarios that can arise in which you would need to have Professional Liability insurance.
Someone who is not yet licensed in your office offers advice – As you know, you have to be licensed in order to be able to discuss coverages with customers. If an employee who is not yet licensed decides to answer a question and the client takes the answer and something happens that contradicts the answer, you will be on the hook for any damages.
Wrong address – If you or your employee put the wrong address on a policy, if a claim arises the company could deny the claim since the right information was not on the policy. Even a small error such as a typo in an address, vehicle identification number, name, date of birth, or even coverage amount could have dire consequences.
Underinsured – One thing that insurance agents struggle with is coverage amounts. Often, the customer is relying on the agent to tell them what they think they should have, especially when it comes to their property. If you advise a customer on how much you think their home should be insured for and it turns out to be underinsured, that could present a real problem. Clients are depending on you to make sure they are put back whole again at the time of a loss.
Documentation – You probably already know, even if you are new in the industry, how essential documentation is in insurance. You can’t say it enough to your employees, because without documentation you will have no defense if a claim does arise. A missing email, or not writing notes about a phone call, have historically put insurance agents out of business. Also, making sure any documentation sent to the client is accurate is imperative.
Certificates – If you work with the commercial lines sector of insurance, you may understand that certificates of insurance are rapidly becoming one of the top issues for agents when it comes to their Professional Liability. Even though they have a disclaimer on them, courts have continuously upheld them when a lawsuit is brought to light. Make sure to always update training on certificates with yourself and your staff and confirm that your Professional Liability insurance limits are adequate.
Part of the industry – Guess what? Sometimes clients can say you or your employees made an error when you actually did not. This is just part of the business of insurance. Even if you never make a mistake, it is likely that you will experience an Errors & Omissions claim. If this is the case, it will cost you money because you will have to defend yourself in court, and it would be best to use a lawyer. Even if you only ever use the defense costs portion of the Professional Liability insurance policy, it can be the difference between you having a prosperous business or going bankrupt and closing.