E&O Insights: 15 Ways to Guarantee an Agency E&O Claim

While most agencies want to avoid errors and omissions (E&O) claims, there may be some agents that are just dying for the experience of what it feels like. For those folks, here are some ways to significantly increase your chances of being handed a summons and complaint.

Tip #1 — Keep your customers in the dark on how their policy works. Do your customers need to know a homeowners policy does not provide flood coverage or insuring their jewelry as contents on the homeowners policy is not as broad as insuring it on a floater? No. The only time it really matters is if they have a claim — and what are the chances of that?

Tip #2 — Don’t bother holding staff meetings; the less your staff knows, the better. Meetings take time and the staff probably isn’t paying attention anyway. If the carriers change their binding guidelines, the staff will find out eventually and, if there is a problem, just tell your carriers you forgot to tell the staff. They will back you up.

Tip #3 — Tell your carriers what you need to tell them to get the account written. Your job is to write business and being honest with your carriers won’t get that done. The less your carriers know, the better. Just because the account had losses in the past does not mean they will have them in the future.

Tip #4 — Sign the customer’s name. Who will ever know? Chasing down your customers to get their signature takes time and agencies just don’t have the time anymore. The carriers won’t know.

Tip #5 — Price is all that matters. When you move an account to another carrier, the customer will be happy as long as the premium is less. The only time it will matter is if they have a claim … and this account has never had a claim.

Tip #6 — Surplus lines — it works the same as the standard market. If you need to bind the account, just go ahead and do it. You’re pretty sure the agreement between your agency and the wholesaler gives you this authority anyway, right? For renewals, don’t bother checking to see if there have been any changes. It’s the wholesaler’s job to tell you that.

Tip #7 — Procedures Manual — tell the employees it is up to them if they want to use it. Keeping the manuals up-to-date takes time, so if an employee wants to use it, that’s up to them. If some staff members like their shortcut better, that’s fine.

Tip #8 — Include a cover letter with your policies telling customers they don’t need to read their policy. After all, that’s your agency’s job: making sure customers are covered. If they happen to have a loss that is not covered, well, that’s why you buy E&O coverage.

Tip #9 — Your promotional material doesn’t have to be accurate — isn’t the goal of promotional material just to write business anyway? Your material should make you sound like you are an expert.

Tip #10 — Documentation is so overstated. Documenting takes time and you and your staff have better things to do. If something happens, there is no doubt the courts will believe you as opposed to your customers. After all, you are an insurance agency.

Tip #11 — When customers stop into the agency to pay their premium, just say “thank you” and let them go. After all, if the policy was cancelled yesterday, they know that just dropping off the premium means they have coverage again. Companies are so hungry for business, they will reinstate and honor a claim if one occurs.

Tip #12 — When customers reduce their coverage, their word is good enough for your agency. If something happens, customers will be very forthcoming and admit they knew they didn’t have the coverage.

Tip #13 — Doing quality control isn’t worth the time. After all, the quality control results have been over 90 percent and that was equivalent to an “A” in school, so that is good enough. Besides, the staff thinks you are spying on them when you do QC.

Tip #14 — On new business, just duplicate what they had before. Your agency is giving the customer what they had before and you saved them some money; isn’t that all they want? To discuss additional coverages would have only made them mad.

Tip #15 — Put whatever you need to on a Certificate of Insurance. After all, nobody looks at them anyway. If you need to add an additional insured, just go ahead and do it. If a problem develops, just tell the carrier you forgot to tell them. Since you regularly play golf with the underwriting manager, there is just no way they won’t help you out.