Many E&O situations arise after a policy has been issued. Sometimes clients will agree to purchase certain coverages, but when the bill arrives they request that some options be deleted.
Any time coverage is reduced, the file must be documented to indicate how the decision was reached, who notified the agency to make the change, and how the request was handled.
Even something as simple as a vehicle change can cause problems when proper documentation is not made.
In This Section:
Best Practices Ideas for Policy Changes
Sample Letters / Documents / Wording
The Best Practices for Avoiding E&O Claims When Making Policy Changes
- Document all conversations with insureds or others concerning coverage, so that there is always a paper trail and a jury will be able to believe that if there is no documentation, then a conversation never happened (See Case Study #4)
- Confirm all policy changes with the insured in writing
- NEVER act on the instruction of someone other than the policyholder without confirming changes with the insured (See E&O TIP)
- When deleting or reducing coverage, confirm in writing and advise the insured of the consequences of the change (See Case Study #1)
- Check your agency’s binding authority with the carrier before committing to bind additional coverage requested by the insured (See Case Study #2)
- Propose other options to the insured that may lower premiums without eliminating necessary coverages
- Require the insured to sign an acknowledgment whenever coverage is reduced or eliminated
- Examine ALL policies for the insured when making changes to one since changes may impact other types of coverage
- Check the change made by the company when received to be sure it matches the insured’s request (See Case Study #3)
- Prepare a written procedure for handling endorsements and policy changes (See Sample Procedures)