“I’m the expert on insuring…….”

In my posting of September 5th, the issue of the legal standard was addressed. This is the basic standard that largely shapes the final resolution of most E&O litigation. There is, however, an element entitled “special relationship” that has the potential to elevate the legal standard.

If “special circumstances” are present in the agency relationship, the agent may possibly be under a duty to take some sort of affirmative action, rather than just follow the instructions of the client.

This could involve situations such as 1) intimate knowledge of a client’s personal and business endeavors, 2) where a client has multiple businesses and agency writes all of the exposures, 3) where a social relationship exists and 4) where additional compensation is involved.

In addition to those just mentioned, the words (spoken or written) have the potential to raise the legal standard. As a result, agency sales staff need to be cognizant that they can be held responsible for what they say and what they put in writing.

Statements such as the following:

  “I will make sure that you are properly covered”,

  “this coverage is definitely better than what you currently have”

  “I am the expert on insuring _______”.

Statements such as these can be held against the agency. Thus, caution should be exercised on the words / phrases used during the sales process. Obviously, sales personnel are looking to make the sale but it is critical that they exercise good judgment in not creating unrealistic expectations or overstating the benefits of coverage.

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