E&O Tip on “Are you electronically delivering policies?”

This has certainly become much more common over the last couple of years – probably because of the gains, both financially and efficiency, that agents have been able to enjoy.

Typically, on issues involving information sent by the agent or contact made by the agency to the customer, the burden of proof falls on the agency. Thus, the agency will need to prove that delivery was made. This could be especially important since in most states, one of the defenses that agents typically can benefit from is the duty of the customer to read their policy. Obviously, for them to be able to read their policy, they need to have received the policy. Without proof of delivery, it is questionable whether this defense could be raised.
It is always recommended that agents include a cover letter when they mail the policies to the customer. With electronic delivery, the issue is basically the same. An agency should include in the e-mail a cover letter advising the customer to essentially review their policy and if they have any questions or if there is a need for corrections of some type, that they should contact the agency promptly.
Be certain to secure insured’s consent to receiving policy / endorsements electronically and that they understand that this is how they will be communicated with. This is certainly very important.
At times, you may not be sure if your e-mail was received by the customer. It could potentially have gotten caught in their filters. As a result, to ensure delivery, include a request in the e-mail asking your customer to respond acknowledging receipt of the policy / endorsement, etc.  When you send the e-mail, put something on diary that if for some reason, you don’t get this return acknowledgement, you should then personally contact the customer. Make sure these activities and responses are noted in your agency management system.
As with any type of automation, the manner in which the agency deals with the automation can determine whether it proves to be beneficial to the agency if an E&O claim were to develop.
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