AVOIDING E & O CLAIMS : INADEQUATE LIMITS
PROTECTING YOUR AGENCY written by Brenda McNeal , Swiss Re
A customer has requested a policy and you have procured a quote . The coverage looks good . The deductible looks good . Most importantly to your customer , the premium looks good . Coverage is bound .
Time goes by , a year or two . Maybe 10 . Then there ’ s a loss . A claim is filed and fortunately , there ’ s coverage . But there ’ s a snag : The policy limits don ’ t cover the full loss amount — or what your customer thinks is the full loss amount — and a straightforward claim suddenly becomes an errors & omissions claim , with the spotlight on your agency and the question from your customer ringing in your ears : How am I not fully covered ?
Limits — or rather , inadequate limits — are an all-toocommon claim in independent insurance agency E & O . With inflation today outstripping even the inflation guards inserted on some policies , these claims are becoming more frequent .
But inflation is not the only reason for these types of claims . Often enough , a cost-conscious customer requests lower limits and is pleased to pay a lower premium ... until a loss occurs , and they are faced with the gulf between the estimated loss and the coverage available to them .
In these instances , the customer does not remember that they were happy with these lower limits or appreciate the relationship between higher limits and higher premiums , or even recall that they requested those limits in the first place .
26 KANSAS INSURANCE AGENT & BROKER