Like all businesses, insurance agencies require attention to detail and professionalism. Should agents fail in their duties, they may cause significant harm to their clients.
By default, the responsibility for the agent’s actions often falls to the agency. Therefore, the agency should do everything possible to limit agent mistakes. Furthermore, the agency should carry appropriate errors & omissions (E&O) coverage for when mistakes happen.
The Benefits of E&O Coverage for an Agency
Insurance agencies help customers find, enroll in and maintain policies. They have an obligation to achieve the correct results for their business.
Should an agent fail to act professionally, this could harm the client. For example, the agent might incorrectly fill out an auto insurance claim. Or, perhaps the agent doesn’t submit the claim to the insurer in a timely manner. These scenarios might lead to a claim denial for clients who might have otherwise had coverage. The improper handling of claims, and subsequent denials, might financially harm clients.
As a result of the agent's misconduct, the agency might be liable for the damage to the client. The agency might therefore have to compensate the client. In such cases, E&O insurance might come in handy. This insurance can protect the agency if professional negligence occurs. It might cover legal costs or other forms of compensation to a client.
Codes of Conduct Can Help
The more responsibility an agent takes, the lesser chance they might make mistakes. Agencies should implements codes of conduct to help agents remain transparent:
- Follow hiring and retention practices. Evaluate agents periodically to ensure that their skills, knowledge and commitment represents the agency’s best interests.
- Require employees to create comprehensive binders of individual client profiles. Agents should use these binders to track the policies policy of individual clients.
- Restrict or control the potential for employee distraction. For example, some agencies go so far as to ban cell phone use by agents handling claims.
- Create a company handbook outlining best practices. If employees understand the rules, they likely can better avoid problems.
- Independent agencies should know the reporting practices of each insurer they work with. Agents might have to follow different rules with different claims.
With attention to professionalism, you can reduce the threat of mistakes in your agency. However, you should always have E&O coverage for cases of unfortunate mistakes. A strong policy can often help agencies better reduce their own personnel risks. Call and talk to our team of professional at 800-460-6424 and put over 25 years of experience to work for you.
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