E&O Tips

E&S proposals – do they provide the coverage you requested?

  

Let’s take a typical scenario that occurs in virtually every agency. I am going to use a contracting risk to explain my point but this scenario could occur with virtually any class of business. Your agency is looking to insure a contractor. The current standard marketplace is not crazy about this type of risk so your agency completes an application required by your favorite wholesaler. The contractor advises you that they are basically a carpenter so that is what you note on the application. Your agency sends in the app and within a week or two, your agency receives the new business proposal. So far, so good, right? Don’t count on it!

 

Are you thinking that the proposal contains all of the coverage’s requested? Since this was a basic request for general liability coverage, what could possibly be the problem?
 
One reason why the E&S market has been able to handle risks that the standard market is not interested in is because the E&S market can modify coverage by adding specific endorsements (typically exclusions) that carve out exposures of concern. With contractors (and potentially with other classes of business), there is a very good chance that the E&S proposal will contain an endorsement typically referred to as the Classification Limitation Endorsement. This endorsement will state that the coverage (in the example used) is provided for the carpentry exposure but that is it. If the carpenter does some dry-walling or plumbing or roofing, etc., there is no coverage.
There is also the possibility that the proposal will reference various exclusions. There is no doubt that these can be significant. In fact, after reviewing the exclusions, you may wonder what coverage is actually being provided. You won’t be the 1st to ever ask this question. You may be thinking, a GL policy is a GL policy whether it is written in the E&S market or the standard market. Right? Maybe not!
 
It is always advisable to request the wholesaler provide you with a specimen of the policy form and the applicable exclusions. This is the only way that you will really know what coverage is being provided compared to what you originally asked for.
 
This specimen policy should then be provided to your client / prospect and they should be asked to review it. There is certainly the possibility the client will advise you that the coverage is not at the level that they require and thus they don’t want the coverage. It is better to find this out before the coverage is bound or before a loss occurs.
 
Thus on new business proposals from your wholesaler, examine them carefully. Your application may have asked for a number of various coverage’s. It is vital that you don’t assume that the proposal provides the coverage that you requested. Don’t count on the wholesaler telling you what they are not providing as at the end of the day, that is up to your agency to figure out.

 

 

 

Producers – don’t rely on your memory – let your documentation tell the story

 
Over the course of any given day / week / month, producers are interacting with their customers on a host of issues. The conversation could involve discussion on how a specific coverage would work or possibly a coverage that was proposed that is being declined. The discussion could be face-to-face or on the phone.
 
It is extremely important (actually critical is a better word) that these conversations be documented promptly and accurately. This documentation should definitely exist in the agency management system and most producers seem to be pretty good with that. However it is also highly recommended that the essence of the conversation be documented back to the customer in some form of written communication (letter / e-mail, etc.). Something like the following:
 
"Joe, to recap our discussion this morning, during our meeting, you advised me that you are not interested in the umbrella proposal I recently provided. If I misunderstood you, please let me know asap.
Also, during our discussion on your building coverage, I explained to you the concept of co-insurance and the importance of insuring your building at the proper level to avoid a co-insurance penalty at the time of a loss. If you wish to insure the building for less than the 80% replacement cost number, it is important for you to understand that you will probably be penalized in the event of a loss and thus not receive the full amount of the loss. You indicated that you clearly understood how co-insurance worked. If you need a further explanation, please let me know as soon as possible".
 
Why do these conversations need to be documented in the system and back to the customer? Well, for one thing, there is certainly the possibility that the customer is documenting the conversation and it certainly would not look good for the customer to have better documentation than the agency producer has. Also, after a loss, there will probably be a dispute as to what the discussion involved. You will state that this was discussed…your customer will probably indicate something different.
 
Let’s assume that the loss is a year after the face-to-face discussion, do you (the insurance producer) want to rely on exactly what that conversation involved? Don’t rely on your memory – let your documentation tell the story.
 
 
 
Designations – do they increase your liability?
 
It is interesting how often this question comes up. Actually, this issue seems to find its way into various legal documents (oftentimes this would be the Summons and Complaint that is served on agents to notify them of the lawsuit). Oftentimes, there will be references to the various designations achieved by the specific agency person (producer / CSR, etc.).
 
There have also been many E&O claims where the main issue in the case was something that would have been addressed in one of the various designation program (CPCU, CIC, etc.) and the plaintiff attorney is alleging that the insurance agent should have been more knowledgeable on the issue since it was covered in the classes. This can certainly depend on the issue as there are many insurance issues that agency personnel should be knowledgeable on whether they have the designation or not.
 
So what’s the bottom line on this issue? In the vast majority of courts on issues to determine negligence, there is no clear cut position / decision that professional designations increase the legal standard of care.
There is certainly a lot to learn to be successful in the insurance industry and it is generally felt that the knowledge secured in achieving the various professional designations will help you to achieve this success. Actually there are some E&O carriers that provide a credit on your E&O premium for having a set percentage of staff with a designation. This seems to clearly show that they favor agents achieving designations. Also, I would think that customers would favor an agency whose staff had designations over an agency where this was not the case.
 
Designations should significantly help agency staff to do their job and to better serve their customers.
 
That by itself is a pretty good reason! 
 
 
 
Have the ratings of any of your carriers changed?
 
There is no doubt that the vast majority of carrier rating changes seem to occur in late Spring / early Summer when the ratings organizations have done their annual review of the carrier financials. However, it is important that agents realize that this is not the only time that ratings could change and thus, they need to be on the lookout and do their due diligence to periodically check on the ratings of the carriers they represent.
 
For example, there was recently the announcement that the rating of a major carrier was changed from B++ to B (Good to Fair). Agents need to be alert these announcements as there is the possibility of some significant E&O coverage issues.
 
Most E&O policies contain some form of an Insolvency Exclusion. Typically they will state some level where coverage is provided. For example, they may state that coverage for insolvency of carriers rated B+ or better at the time of placement is provided. In essence, carriers less than this would be excluded. One of the key phrases is “at the time of placement”. Taking the above scenario, if the agency placed coverage with a carrier and they were rated B++ at the time of placement and they subsequently were declared insolvent, they would be coverage under the E&O policy subject to any other terms / exclusions, etc. However, if the agency placed an account with that same carrier after they had been downgraded to B and that carrier was declared insolvent, there would now be NO coverage.
 
This is heavily one of the reasons why agents need to be periodically checking the rating of the carriers they do business (as well as the carriers used by their wholesalers). Agencies should have a designated person that has this responsible for checking the ratings of the carriers. Another option is to sign up for alerts from the ratings agencies. These alerts will notify the agency when the rating of one of the carriers they represent has changed. 

 
Just duplicate what I have – 5 very dangerous words
 
These are probably 5 of the most common words spoken by both personal and commercial lines customers. What they seem to be saying, in my mind, is that "I am paying too much…just give the same coverage that I have now but at a lower premium." In other words, their focus is primarily on the price, not the coverage.
 
So what is the danger in all of this?
 
Essentially, when a producer duplicates what the customer currently has, this heavily assumes that the prior agent did a professional job….a job that involved a current and in-depth evaluation of the various exposures and limit issues. It probably also assumes that the customer understands his/her insurance program in sufficient and necessary detail.
 
If you duplicated the coverage and a problem developed, you may be asking "Whose mistake is this? Mine or the prior agent?" I believe that most courts and plaintiff’s attorney (representing the customer suing you) will look to prove that this is now your account and thus it is now "your mistake".Essentially, duplicating the mistakes of the prior agent does not relieve you and your agency from any liability.
 
What should an agent do? It is highly recommended that an agent should utilize an exposure analysis checklist to identify the potential exposures to prompt discussion with the customer on those exposures. In addition, any limits (property, business interruption, liability, etc.) should be examined for their appropriateness. When it comes to liability limits, it is always best to offer options forcing the customer to decide which limit they want and thus which limits they do not want.
 
Don’t duplicate what they currently have. This approach heavily removes the value that independent agents bring to the table. That value involving taking a fresh look at the customer’s insurance program and finding effective ways to help the customer better understand the coverage they have and how it works. In fact, look to include definitions and claims examples in the insurance proposal. This is a very effective "customer education" tool – it also is a great E&O loss prevention measure.
 
Include a disclaimer on your e-mail
 
It seems that virtually every agency has a disclaimer on their voice-mail essentially stating “please be advised that you cannot bind, modify or delete coverage without talking speaking with an agency representative”. Since there is certainly the possibility that your customer could be communicating with you via e-mail, be sure to include this disclaimer on your e-mail signature line as well. This disclaimer could be significant if a customer sent your agency a message to bind coverage and a problem subsequently developed.
It is important to tell your customers if you can’t get them the coverage they are looking for 
Virtually every state has specific duties and expectations for insurance agencies and their clients. In most, if not all states, an insurance agent is not required to 1) Provide an insurance policy that would cover all possible contingencies, 2) Advise to insured with respect to coverage options and 3) Advise the insured as to every exclusion contained in the policy. Once again, these are things an agent is not required to do. There is definitely one thing that an agent is required to do: they are required to inform their client if they cannot obtain the requested coverage. So if you can’t get the coverage the customer is looking, as soon as you know, let the customer know. Don’t leave them hanging. Based on the significance of the coverage request, an agency should give serious consideration to advise the customer that they may want to contact another agency.
 
 
 
Your Homeowner’s customers – are they cover for their social media activity?
 
At times, it seems like everyone in the United States is using some type of social media such as Facebook, Twitter, You Tube etc. Unfortunately, there are times where the messages sent via this media lack professionalism and common sense. If a problem were to develop, does the unendorsed homeowner’s policy cover your customer’s social media activities. There are many articles addressing this issue and it seems that the bottom line in all of them, the answer is “no” – an unendorsed homeowners policy would not provide the necessary coverage. To do that, most agencies are endorsing the homeowner’s policy with a personal injury endorsement of some type. It would be best and highly recommended to check with each of your carriers on this issue for their advice and counsel. Then look to educate your customers on why this endorsement could be so critical.
 
 
 
Signing an Insured’s name – a definite no-no!
 
When completing an application, an agency should be sure to have the customer sign the application as there is tremendous power to a signed app. However, for the agency to truly benefit from that signed app, it is critical that the signature on the app be that of the customer / prospect. If a member of the agency signed the app for the customer, this could certainly spell trouble. In many E&O claims, the issue of who signed the application could certainly come into play. It the customer were to allege that the signature is not theirs, it is conceivable that the plaintiff’s attorney will secure handwriting experts to make a final determination. If it is proven that the application was signed by an agency representative, this has the power to significantly alter the future direction of that E&O claim.
 
 
 
Certificates of Insurance – What Could Possibly Go Wrong?
 
Over the last couple of years, E&O claims involving the handling of certificates of insurance have been on the rise. While most realize what a certificate is, it is equally important to realize what a certificate is not. It is not a policy of insurance. It is not a contract. It does not amend, extend or alter the coverage afforded by the actual policies. A certificate should not be issued with broader coverage than the policy. If there is a need to provide broader coverage, such as adding an entity as an additional insured, check with the company first to make sure they will approve the endorsement request … and be sure to get this approval in writing! If the certificate requires the listing of an E&S company where you are technically not the agent of record (the wholesaler is), contact the wholesaler for their approval or request that they issue the certificate. Many agencies assign specific staff to the issuance of certificates to avoid any problems.
 
 
 
Dealing with Your Clients’ Divorce – a Potential E&O Nightmare!
 
Separation/divorce scenarios can and have caused E&O claims. If you are aware that you have clients going through a separation/divorce, this should be handled with tremendous attention to detail and solid communication. Coverage under various personal lines policies (auto, homeowners, umbrella, etc.) is based on the named insured and the residence. As a result, changes in the living arrangement can reduce/eliminate coverage. The key is communication with both parties. Look to arrange coverage for both individuals equal to what they had under one policy. Anything less than that should be explained, understood and agreed upon. Letters should be sent to each informing them of the action taken by the agency and inviting questions or further changes that may be needed. Sometimes you will not know if there are marital changes and may need to ask if you suspect something significant is happening.
 
 
Cross-Selling in Personal Lines: Reduce Your E&O Exposure by Increasing Revenue 
It’s probably fair to say that for every one of your personal lines accounts, there is another sales opportunity waiting to be explored. The key is to use your agency management system to help you. Can you identify the accounts where you write the auto and the HO, but no umbrella? What about the ability to expand the HO coverage via a Home Business Endorsement or by identifying a collectible that is not properly insured? Does your customer possibly have a boat that is insured elsewhere? Personal lines accounts have tremendous potential for identifying exposures not protected through your agency. Develop a list of personal lines exposures/needs analysis, and then merge it with a letter from your agency system to send out. Did you know that less than 25% of women’s diamond rings are insured? There’s a sales opportunity right there! Communicating with and educating your customers places some degree of responsibility on them to advise you if they desire certain coverage’s.    
 
 
 
Are There any Mistakes in Your Files?
 
That’s a good question to ask the staff at your next staff meeting. Of course, the answer is “yes.” If you knew which file it was, you would undoubtedly fix it. The problem is that you don’t know which file it is and probably won’t know until that customer has a loss not fully covered and then alleges that your agency erred by providing insufficient coverage. This prompts the need for the agency to have standards/expectations for handling its customers. Of the many areas that can be addressed, probably none is more critical than documentation. The issue might be phone calls (including cell phones), requests for coverage modifications, declination of proposed coverage’s, etc. If you don’t have a document that clearly spells out the expectations, develop one. And review it in detail with the staff. Without such a document, you are leaving it up to each staff member – and that has danger written all over it.
 
 
 
Customers that Pay at the Last Minute…What Could Possibly Go Wrong?
 
There is a strong possibility that whether you write personal lines or commercial lines, you have some direct bill customers that pay at the very last minute. You might even have some stop at your agency to pay after the policy has been cancelled. Any time you have a customer that comes in to make payments, it is important that the staff (receptionists, CSRs, etc.) check the policy status before accepting payment. Some agencies have taken a position of not accepting the premium when it is right near the due date – instead giving the customer an envelope for that company and advising them to send in the premium themselves. You might also have a situation where a customer is looking to delete certain coverage’s right around the premium due date and looks for you to recalculate the premium due. The best approach is to advise them to pay the correct amount due and note that any overpayment will be credited toward their next installment.
 
 
 
How Loud are Your Customers Complaining?
 
How well are you listening to your customers? Let’s face it …we are human beings and thus not perfect. A great way to find out your agency’s shortcomings is to listen to your customers: what they like about the agency and what they don’t. An annual survey is a great approach. From time to time, you are going to have a customer that is not happy. That’s not necessarily a bad thing provided that you listen to their issue. An unhappy customer should receive immediate attention to resolve the issue before it gets worse. Develop a documented procedure for advising management of customer complaints. Then, through a thorough, extensive investigation, determine what – if anything – went wrong and how to fix it. There are E&O claims that started with an unhappy customer who was ignored. Listening intently to your customers can have significant positive benefits and might even save you from an E&O claim!
 
 
 
Performance Reviews – How Often are You Providing this Key Feedback? 
 
The goals of each agency are to grow and be successful. Since agencies are made up of people, providing them with feedback and training will enable them to grow, which in turn benefits the agency. Conduct an annual performance review of each of your staff members, addressing their various technical skills (software and insurance coverage’s) as well as their sales and customer service skill levels. Meet with every staff member … it takes time, but the benefits are huge! Plus, their merit raises should be based on performance. Also include an educational objective. Consider having the staff begin a course of study or attend a seminar or two. Cross-training is also a great objective that will benefit the agency. Education translates into knowledge. When your staff knows the product they are handling, they will position your agency as a professional shop with quality people.
 
 
 
Using Temps to Handle a Vacant Position? There’ Something You Need to Know 
Using Temps to Handle a Vacant Position? There’ Something You Need to Know…
Certainly from time to time, a position in your agency becomes vacant. Presuming this is for a short period, agencies often reach out to local staffing agencies to fill these posts. Most likely, a temporary worker is technically not considered an employee as you are paying the temp agency directly. In addition, because insurance agencies are especially known for “giving back to the community,” hiring high school or college kids during the summer is all too common. Are they considered an employee? Well, in both of these situations there is certainly the possibility that these persons could cause an error. If they do, are you positive that your E&O provides coverage? If only employees are covered, this could be a sticky situation. Check the “Who is an Insured?” definition of your E&O policy to be certain. For Utica customers, there’s no need to check as leased/temp staff are automatically covered.
 
 
What does Your Promotional Material Really Say about You? 
 
There is no doubt you want to aggressively and effectively promote your agency. After all, it’s a competitive marketplace out there! Remember, though, that how you promote your agency could come into play at the time of an E&O claim. For example, you might state “We are the experts” or “We make sure you are properly covered.” Those are two statements that could come back to bite you as that is the standard that you have now created for your agency. At the time of an E&O claim, all of your promotional material –printed materials, Yellow Pages advertising, Web site, phone recording that plays when customers call and are put on hold, etc. – is subject to discovery by the plaintiff. They will contend they relied on that material and that is why they selected your agency for their insurance needs. Take a few minutes to review how you are promoting your agency … and make sure your materials are accurate and truthful.
 
 
 
Agency Procedural Manual – Use It or Lose It – October 17, 2013 
 
One of the goals of virtually any organization is consistency: in other words, doing it right. A procedural manual can be and often is a great tool to accomplish that objective. For it to be effective, though, it is important that this document be updated as needed, with the changes effectively communicated to the staff. A person/committee should be responsible for this to ensure accountability. Do you have a manual, but are unsure whether it’s up to date or if the staff is really using it? You have two options: update it or throw it out! At the time of an E&O claim against your agency, this manual is subject to discovery by the plaintiff’s attorney. Having a procedural manual not being adhered to by everyone will not bode well for you in the courtroom. For assistance in developing a manual, contact your state agent’s association.
 
 
 
Educate Your Customers 
  
Before you entered the insurance business, how well did you understand your insurance coverage’s? Now you know how your customers probably feel. If you are not educating your customers on what’s covered, what’s not, what limitations there are, etc., now is a good time to start. Develop a newsletter (paper or electronic) and/or dedicate a section of your Web site to education. While it is probably not possible to cover every detail, it would be prudent to address the more salient issues and those that are more appropriate based on the time of the year. Encourage your customers to ask questions. On the everyday questions that I’m sure your customers are asking, develop a “frequently asked questions” approach. Look to your staff to be the contributing authors. They’re sure to take great pride in their assignment and make you proud, too. Be sure to have the newsletter proofed by management before it goes out. Education – a great way to show your agency’s professionalism and the value it provides.
 
 
Documentation 
While the phrase document, document, document is very common, there is much more required for documentation to be truly effective. The documentation should be detailed.It should include specific names and details and comments on any open items yet to be resolved. A good rule of thumb is: If the person doing the documentation in the agency system is not in the office the next day, will the person reading the documentation know exactly what was discussed and who it was discussed with. The documentation should be professional. Negative or defamatory comments in your system about your client can be very damaging to your agency’s defense if an E&O matter were to develop. The rule of thumb: Don’t put anything in the system that you wouldn’t want a jury to read.
 
 
 
Do your applications meet the 3 c’s – Complete, Current and Correct 
The 3 C’s – Complete, Current and Correct! Some solid tips to turn the power of the app in your favor:  
1) Ensure that all applications are complete and there are no unanswered questions
 
2) Don’t complete this year’s app using the answers from last year’s app 
 
3) Whenever possible, complete the application face to face with the prospect, asking them the questions exactly as they appear and accurately noting their response on the application. 
 
After completing the application, request that the prospect/customer review it to ensure you have accurately stated the exposure. Then have them sign it. By mandating and enforcing these requirements, the power of the application is now in your favor.
 
 
 
Exposure Analysis Checklist 
Effective use of an Exposure Analysis Checklists is considered by many the closest thing to a silver bullet in minimizing the potential your agency could face an E&O claim. They provide a tremendous amount of technical knowledge on over 650 SIC codes to help the producer better understand the risk. In addition, they provide a series of key questions to enable you to accurately present the risk to your carriers. In addition, if a customer does not want specific coverage’s, the checklists will prompt the producer to get the signature of the customer noting their rejection. This type of documentation has been shown to be a significant issue should E&O litigation develop. 
 
 
Be Honest With Your Carriers
The basis of the relationship between the agency and the carriers it represents is heavily based on trust. When providing your carriers with submissions, there is an expectation that the application truly represents the quality of the risk. This is the only way that the carrier can truly assess their appetite and determine the proper premium for this exposure. If you were to mislead the carrier into writing a risk that they believe is better than it really is and that “error” was discovered, you will seriously damaged your reputation in the industry and also that of the agency you work for. If a loss occurred and the carrier was prompted to pay the loss that they don’t feel they should have had to, the carrier could pursue legal action against your agency. Bottom line, the relationship between your carriers and your agency is built on trust. Being totally honest is a key part of that relationship.
 
 
Include Definitions In Your Insurance Proposals 
To assist customers in totally understanding your insurance proposal, include the industry definitions for many of the key terms and phrases. Not only will your client gain a better understanding of their insurance program but this education will also enhance the reputation of your agency and probably lead to increased sales. Check with your Exposure Analysis Checklist as they should have this information readily available. Also consider including claims examples where possible to show how the coverage works.
 
 
 
Staff Meetings 
 
There is no doubt that agency staff meetings, if properly conducted, can be extremely valuable in many areas. They include: Communication – these meetings are a great way to address current issues, changes in company binding levels or new coverages; Education – if possible, have a topic established for each staff meeting. The subject may involve "Discussing the E&O exposures of each staff level" or issues centered around the specific time of the year; Confirmation of key agency practices – staff meetings present the perfect opportunity to stress key agency practices, such as the importance of thorough and timely documentation not only in the agency file but with written documentation back to the customer when appropriate.Staff meetings provide a clear and consistent message to all members of the agency.
 
 
 
Policy Review 
 
Although it is generally felt that the quality of carrier issued policies has improved, mistakes certainly can and do happen. As a result, there is certainly the potential for any policy not to reflect what was ordered. It is suggested that every agency have a procedure to check the policy comparing it to what was ordered. It is best to have a form that addresses all of the potential areas to ensure consistency and thoroughness. The person performing the comparison should initial and date when this task was performed.
 
 
 
Broker of Record Letters 
 
When you take over an account by broker of record, it is important to realize your work is not done; in fact, it is actually just beginning. One of the key issues involves to what degree the current policies reflect the current exposures. It is best to treat this new customer, personal or commercial, as if they were a brand new prospect. Prove your value by conducting a comprehensive review of the file. This includes reviewing their current program, identifying their exposures and providing them with coverage options to consider. Exposure Analysis Checklists are a great tool to assist you in this regard.
 
 
Listen To What Your Customer Is Requesting 
In most, if not all states, the producer is held to the duty of providing the coverage that the customer has specifically requested. If they are not able to provide that coverage, they should inform the customer accordingly. Due to this requirement, it is important that producers listen carefully to what the customer is requesting. The essence of this conversation should not only be documented in the agency file but also via some form of written communication back to the customer.
 
 
 
Signed Application
 
There is tremendous power to a signed app. After the completion of an application, require the customer to review it to ensure its accuracy and then request their signature. The goal is to make sure that the agency personnel has not misstated the answers to any of the questions. By requiring the customer to sign the application, they are attesting to the accuracy of the information. Their signature on this document could play a significant role if the information is alleged to not be accurate.
 
 
 
Moving Coverage From One Carrier To Another
 
Are you looking to move an account to another carrier? If doing so, be sure to identify any areas where the replacement policy is inferior to the expiring policy. This could include areas such as the scope of coverage, rating of the carrier, sub-limits, exclusions and definitions. It is highly recommended that these differences be brought to the attention of the customer for their approval and sign off.  This documentation should be retained in the agency file.
 
 
 
Documenting Interactions with Carriers & Markets 
 
Oftentimes, it is necessary to contact the carrier on various coverage and underwriting issues. To ensure that there is no misunderstanding on the information communicated and that there is a solid record of the conversation, take the time to document the key conversations. This documentation should not only be in the agent’s system but also with an e-mail or letter back to the carrier restating the matter and resolution. If a problem were to develop, this documentation could be instrumental in absolving your agency of any wrongdoing.
 
 
 
Covered Letter’s 
 
In the vast majority of states, the customer has a duty to read their policy. To encourage them to do so, it is highly recommended for the agency include a cover letter when sending or delivering the policy. The following is some suggested verbiage for this letter: Enclosed please find the renewal of your (type of coverage) written with (name of insurance co). You will be receiving your premium invoice shortly. It is important that you take the time to read this policy to ensure your understanding of the limits and the coverages. If there are any questions or you wish to make any changes to this policy, please contact our agency promptly. The limits of insurance have been selected by you and we can’t guarantee that the limit selected will be sufficient in the event of a major loss. Higher limits are available upon your request. Thank you for your confidence in our agency; we appreciate your business.
 
 
 
Get Sign Off On Coverage Not Desired 
When providing proposals for your customers, there is certainly the possibility that the customer will not secure all of the coverages proposed. When this occurs, be sure to require that the customer sign for those coverages that they are not securing. This proposal document could play a significant role if an E&O matter developed due to alleged confusion on the part of the customer on which coverages they purchased. 
 
 
Offer Options 
 
When providing proposals for your customers, it is recommended that you provide a series of limit options for the customer to consider with a statement noting that higher limits may be available. The goal is to help educate the customer and require that they make a decision on which option they are selecting. The proposal should reflect the options chosen and those rejected.
 
 
 
Excess & Surplus Lines 
When receiving General Liability proposals from your wholesaler, be on the lookout for the Classification Limitation endorsement. This endorsement is intended to restrict coverage only to the classification shown. Thus, if the client performs any other type of work, they will not have any coverage. It is critical that the client be advised of this endorsement and its implication. In addition, they should be advised of the need for them to contact your office before they begin to perform other types of work so that the proper coverage can be secured.
 
 
 
Co-Insurance  
 
When presenting proposals for property coverage with co-insurance include a claim example to educate your client or prospect how co-insurance works and the importance of insurance to value. Include definitions of key terms specific to your proposal such as Actual Cash Value andReplacement Cost. Always discuss the value of independent appraisers to establish replacement cost values. If your prospect or customer provides you with information used by your agency in estimator-type calculations of property values, include the following disclaimer on your proposal:
 
Property limit(s) was/were calculated based upon information provided by “Name of Prospect/Company”
 


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