Do you have a new client who is getting coverage through your agency? It’s a good idea to obtain a complete copy of their existing policy or coverage for comparison purposes. If a new policy does not provide as much coverage as their existing coverage, your potential E&O exposure increases exponentially.
Ever heard of the ‘mirror test’? It’s a line-by-line comparison between two policies that agents should make anytime a client is changing insurance carriers.
It’s a detailed look at the differences between a client’s new coverage and their prior coverage. If coverage is not exactly the same, you’ll want to help your client fully understand what’s different and what those differences could mean to them in the event of a claim. It’s not enough to go over these differences verbally. It is especially important that agents provide written documentation of any differences in coverage, especially when it involves any type of reduction in coverage. You’ll also want to make sure your client provides written permission for the change in coverage and written consent that they understand the differences between their existing and new coverages.
It’s hard to overestimate the importance of documentation. Document your efforts to explain any differences between a client’s existing coverage and new coverage. It’s often helpful to first provide the information verbally to a client, making sure you ask them to clarify anything they don’t understand or have questions about. Step number two is to provide a written recap and ask once again if they need any clarification. Always encourage your clients to call you if they have questions or are confused about something relating to their coverage.
Making sure your customers understand and acknowledge any changes in coverage is an important step in preventing errors and omissions claims. Want to learn more? Go to this link.