Both you and your agent have a responsibility to ensure proper coverage
A good insurance agent never wants to hear a client or potential client say “Just duplicate what coverage I already have.” And if the agent does hear those words, he or she knows not to comply. This is because simply duplicating the insured’s current coverage often causes Errors and Omissions (E&O) claims against the agent. What’s usually going on is that these clients are afraid changes could result in higher premiums, or their lack of insurance knowledge makes the buying process intimidating.
Simply honoring the customer’s wishes assumes that either a prior agent did an in-depth evaluation of all the exposures and provided the customer with appropriate options or there have been no changes in the client’s organization. At Sadler, our insurance experts take the time to review your policies and your organizations needs with you to make sure you’re adequately covered.
What’s at stake
A business that experienced growth or took on a new direction since the policy went into place needs to be reevaluated. Acquiring new assets or putting in place substantial risk management practices can also affect coverage. Replacement cost values increase with the economy, so the coverage needs to reflect the current value. Inadequate coverage in these and many other areas can be disastrous if a claim if filed. An irate customer could rightfully blame the agent and the agency and file a lawsuit.
Clearly, avoiding an uncovered loss and expensive lawsuit justifies the small amount of additional time to reassess your insurance needs rather than duplicate any possible mistakes made by a prior agent or depend on a policy that doesn’t reflect your current needs.
Your agent should do the work for you
Your current agent should treat you as a new customer at renewal time and perform a proper evaluation of your exposures, making suggestions and recommendations on how to strengthen your program. If shopping for a new policy, the agent providing the quote should do the same. Agents should also review the entire insurance program with you and assist you in better understanding how it works.
This is where the effective use of an optional coverages checklist is helpful.
- A checklist can identify policies not in your current insurance program, such as Workers’ Compensation, Cyber Liability, and Errors & Omissions Liability.
- A checklist should also include the coverage or endorsement options that may not included on your existing policies such as employee benefits liability, pollution, liquor liability, business interruption, flood, earthquake, etc.
- A checklist should include key insurance terms and their definitions to help you understand the insurance program and how it works.
- A checklist is a record of what your agent offered and what you decided upon.
Please contact Sadler & Company if you have any questions or concerns and will gladly share our proprietary optional policies/coverages checklist.
Source: Curtis M. Pearsall, “E&O Insights,” Insurance Journal, 18 Aug. 2014.