Stay in Your Lane – Part 1

NOTE: This is the first part of a two-part guest post from Friend of the Academy, Michael Gay.

Why Saying “No” May Be the Best Decision an Insurance Agent Can Make

The account looked promising. The prospect was successful, the premium was substantial, and the referral came from a valued client. The only problem was that the agent had never insured that type of operation. Still, the application looked manageable, the carrier was willing to quote it, and the commission was difficult to ignore. So the agent said “yes.”

Months later, a major loss exposed what no one had recognized: operations had been misunderstood, critical exposures had never been discussed, and essential coverage had not been requested. An attractive new account became a costly dispute among the insured, the carrier, and the agent.

This pattern is common in our profession. Agents rarely get into trouble because they are dishonest or indifferent. More often, they accept business they do not fully understand and fail to recognize the questions that should have been asked. The central issue is not attitude. It is competence.

Sometimes the most professional thing an agent can say is, “This is outside my area of expertise.” That is not weakness. It is judgment. It is the clearest expression of professional competence. It also marks the point where competence should guide the next decision.

Know What You Know

Competence is earned through education, repetition, mentorship, underwriting discussions, claims experience, inspections, and years of working with similar accounts. An agent who has insured contractors for two decades will recognize exposures another less competent agent may miss. The same is true in healthcare, transportation, manufacturing, habitational risks, and public entities.

An insurance license gives a producer authority to transact insurance. It does not confer expertise in any class of business. Physicians specialize. Attorneys develop practice areas. Insurance professionals should do the same. Knowing what you know means understanding where your experience is deep enough to provide meaningful advice—not merely where you can obtain a quote. That distinction leads directly to knowing what you do not know.

Know What You Do Not Know

The greater mark of professionalism may be recognizing the boundaries of your knowledge. Unfamiliar accounts often look deceptively simple. A contractor may have unusual additional insured obligations, residential exclusions, or subcontractor controls. A manufacturer may import parts, sell overseas, assume broad contractual liability, or depend on one supplier. A healthcare organization may face professional liability, privacy, abuse, credentialing, and cyber exposures. Transportation companies require specialized expertise that extends well beyond commercial auto coverage. Without that knowledge, an agent may not even recognize the questions that need to be asked before coverage is placed.

The danger is not merely that the agent lacks an answer. The greater danger is that the agent does not know which questions to ask. Experienced professionals slow down, seek help, and admit uncertainty. Humility is a safeguard against preventable errors, because it keeps the agent focused on what must be known. It is also what keeps hidden exposures from becoming surprises.

Every Industry Has Hidden Exposures

Every industry has its own language, contracts, operations, and loss patterns. Restaurants involve liquor liability, contamination, delivery, spoilage, and employment exposures. Contractors require attention to classifications, completed operations, contractual risk transfer, and project requirements. Manufacturers may need product recall, equipment breakdown, pollution, contingent business income, and international coverage. A transportation company’s agent must understand FMCSA regulations, determine when an MCS-90 endorsement is required, recognize applicable federal financial responsibility requirements, evaluate driver qualifications, understand cargo and commodity classifications, radius of operations, trailer interchange exposures, and distinguish between common, contract, and private carriers. Addressing these issues upfront may well determine whether the insurance program responds when the client needs it most.

In my work as an insurance expert witness, I have reviewed decisions agents and brokers made before significant losses. One pattern appears consistently. The issue is often not that the agent did not care or intentionally ignored a problem (although sadly I have seen my share of uncaring, uninformed and lazy agents). Rather, the agent failed to recognize a critical exposure because it fell outside the agent’s experience. The questions that should have been asked were never asked because the agent did not know they needed to be asked. By the time the claim occurs, that distinction offers little comfort to the client—or protection to the agent. The lesson is simple: competence must come before confidence. It also shows why the underwriter cannot be expected to fill the knowledge gap.

The Underwriter Cannot Protect You

Agents sometimes assume the underwriter will identify whatever they missed. That is dangerous. Underwriters perform an essential function, but they evaluate risk largely based on the information presented. They are not the insured’s risk manager and do not conduct a comprehensive coverage analysis for every submission.

If the application misstates the operation, omits an exposure, understates values, or fails to disclose contractual requirements, the underwriter may never know a problem exists. The retail agent remains the professional closest to the client and must understand the operation, ask the right questions, and communicate material information accurately. When that does not happen, the responsibility stays with the agent. That is why some decisions require walking away.

About Michael:

Michael W. Gay, CPCU, AAI, AAI-M, AINS, AIS, ARM, ARM-P, CIC, CRIS, is an insurance consultant, educator, author, and expert witness with more than 45 years of experience in the property and casualty insurance industry. His career has included executive leadership with insurance carriers, managing general agencies, and retail agencies, as well as agency ownership. He is the co-author, with Patrick Wraight, of Risk-Proof Your Business: The Complete Guide to Smart Insurance Choices—Expert Insights for Navigating and Mitigating Business Risks (Wells Media Group, 2024). Michael provides expert witness services nationwide in matters involving insurance agent and broker professional standards, coverage issues, and insurance industry practices, serving both plaintiffs and defendants. He is the founder of Michael Gay Consulting, LLC.