As agents or as professionals within the insurance industry, we know the importance of remaining compliant at all costs but you never know when a mistake will arise. Unfortunately, according to the law, negligence , whether it was intentional or accidental, falls on the fault of the agent. Period.
Here are some basics every agent and agency should know when it comes to negligence and trying to prevent it in your agency.
WHAT IS IT?
Insurance agent negligence is when your client believes that they're covered by a policy when they are not. Whether you mistakenly led the client to believe they were covered or if you simply weren't clear in your explanation of their coverage, you, as the agent, are still at fault. If your client makes a claim and is denied coverage, it can fall on the agent to compensate them for damages.
Your client is within the law to file a claim against you for the following:
• Failure to procure requested coverage
• Failure to obtain coverage
• Failure to properly advise clients of coverage
As with many things, the laws on agent negligence vary from state to state and are not nationwide. The specifics for agents are spelled out in more detail in each state’s codes or statutes, but there are many similarities across the board.
CAN CLIENTS SUE?
Yes. Your client can sue you if you're guilty of negligence and the client is able to prove any of the following:
• Duty - You had a duty to act or refrain from acting in a certain way
• Breach - You failed in your duty toward your client
• Causation - The breach of duty caused your client harm that you, the agent, should have foreseen
• Damages - Your client suffered actual damages (such as lost wages and medical expenses)
This is what agents must go above and beyond when it comes to compliance. The consequences to being sued by a client can be very serious. Not only could being sued cost you a lot of money, but it could also cost you your reputation and the reputation of your agency, however, the negative effects it could have on your client could be catastrophic. In a situation where your life and your client's life could both be very negatively affected by any potential wrongdoing, we strongly advise agents to be diligent when staying compliant.
HOW CAN I AVOID IT?
Staying on top of your everyday interactions and processes and making sure that all you do is done with great care and morality is our best advice. Mistakes and accidents can happen and whether or not the agent is aware at the time, the outcome would be the same. It's important to do your best to avoid that risk at all costs. Being 100% honest and fully transparent when explaining the details of your clients coverage is the best way to avoid this risk.
Although we're in a sales role as agents, making the sale can not be more important than doing your job properly and finding the best plan for your client. A good agent will be sure they've done their homework and exhausted all plans so they can offer their client the very best plan for them. Not doing so could be much more dangerous than losing a sale.