What does your insurance agency do if you can’t get your insured the coverage they are looking for?

From time to time, there are probably going to be circumstances where your customer is looking for certain coverage that you just don’t have a market for. There are a variety of situations that may cause this. It could involve a unique exposure that the customer is looking to insure or possibly limited coverage due to the customer’s loss exposure.

One E&O claim that I remember involved a personal umbrella for a long time agency client. The agency wrote all of the coverages for this client including their personal and business coverages. Because of the driving history of their only son, the existing personal umbrella carrier non-renewed the coverage forcing the agency to pursue securing coverage elsewhere. The agent did find a market for the umbrella but the policy contained an endorsement excluding any auto claims arising from the son.

Sure enough, the kid causes a horrific accident resulting in extensive injuries to the occupants of the vehicle they struck. The total claim was in excess of $4,000,000! The auto policy paid their limit but the umbrella carrier denied the claim because the son was excluded from coverage. Although the insured acknowledged that he was aware of the exclusion, the agency was still subsequently sued. One of the main aspect’s of the customer’s position was that if the current agent could not secure the necessary coverage (an umbrella without an exclusion), that agent had a duty to refer the customer to another agent to possibly secure the necessary coverage.

A significant aspect of the customer’s position was due to the long time relationship between the agent and the customer (quite possibly a “special relationship” that could raise the standard of legal liability).

Bottom line, the E&O carrier paid around $250,000.

Based on the circumstances, there may be situations where you (the agent) should advise the customer something to the effect of “this is the best that I can do…you may want to check with other agents to see if they can provide the coverage that you are looking for”. In the above claims scenario, it is doubtful that there were were other umbrella markets that would provide the coverage without the exclusion but if the agent would have at least made the offer, their liability would have potentially been minimized.

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