The proper handling of policy delivery is actually an important element in an E&O loss prevention program. Because of this, insurance agencies should have a written agency procedure to follow.
For many agencies (more specifically the producers), the procedure is to deliver / mail all of the policies when they have been received and checked. While this may sound logical, in practicality, there are numerous situations where policy deliver is held up waiting for that one “straggler policy” to come in. Unfortunately, by the time that “straggler policy” comes in, is checked and prepped for delivery, you could be many months into the coverage period for that client. Meanwhile the policies could be still sitting on a desk (or on the floor) in the producer’s office.
I am certainly not suggesting that every time a policy comes in that it should be delivered after being reviewed. It does make sense to hold some of the policies and then to deliver them together. The key issue is to recognize that if there is a policy (or two) that is not going to be received for a while, the producer should deliver those policies that have been received and advise the client that the outstanding policy will be delivered when received by the agency.
Policy delivery should not go like this – “here are your policies, everything is as per our discussion”. When delivering the policies, it is suggested that the producer go thru a brief review of the policies and to point out some key issues. These could involve a Protective Safeguard Endorsement or a Classification Limitation Endorsement or the fact that the deductible applies to defense costs. Producers should look at policy delivery as the means to help the client better understand the coverage they (or don’t have). To do this, the producer should definitely prepare for the client appointment by reviewing the policies and noting any issues that they would want to consider bringing to the client’s attention. Also, during the discussion at delivery time, this presents a great opportunity to remind the client of coverages they did not buy.
Agencies should require that the agency system reflects when the policies were delivered and any discussion that developed during that meeting.
If physical delivery of the policies is not realistic (and it won’t be for all clients), the same philosophy of timing should be followed. Also, it is suggested to include a cover letter encouraging the client to read their policies and to call the agency with any questions or comments. The cover letter could play a key role in the defense of the agency should a problem develop.