The 'Jones Agency' (a fictitious name for a real agency) presented itself as a Multi-line P/C agency. 'Auto-Home-Life-Health-Business Insurance' were proclaimed on its letterheads, street window, calendar, and promotional items. Its personnel included people licensed in all those forms of insurance, and its production included all of them.
Mr. and Mrs. Thompson bought auto insurance from the Jones Agency, and a short time later they were solicited for, and bought, a homeowners policy from Jones. Some time later, Mr. Thompson died.
What did the Jones Agency do wrong?
The Widow Thompson claimed in a lawsuit that the Jones Agency committed a negligent omission in failing to address her and her husband's insurance needs. According to her argument, paraphrased here:
As lay people, we had confidence that our insurance professionals would look after our interests. It was not our duty to raise the questions that they should have raised, nor to know the answers that they should provide. We did not exclude any form of insurance from consideration, relying on them to treat us professionally in all areas of their expertise. They proclaim that they handle life, and they have written life insurance for other clients. As their clients, we should have had a chance to have our life insurance needs, and our presently-held policies, reviewed for obsolescence and possible improvement or supplementation. If such an offer had been made, our Life insurance program would have been improved, and the financial positions of my late husband and of myself would have proven much better. Jones Agency failed us professionally.
In response, Jones declared that the agency was under no legal compulsion to offer Life insurance to all its P/C insureds. After all, it replied:
We are primarily a P/C agency, and although we are permitted to sell Life insurance, it is an option on our part, just as it is an option on our clients' part, individually, to buy it or reject it. We handled the Thompsons' P/C coverages properly; that's as far as our legal obligations go, since the Thompsons didn't ask us about Life insurance. We advertise that it is available here, but that doesn't mean that we have an obligation to talk about it to each client.
The court ruled in favor of Mrs. Thompson, finding in effect that if the agency represents itself as professional, then it must deliver professional services. If it represents itself to its lay clients as having expertise in Life insurance, then it is carrying the burden of presenting to its clients a chance for that expertise to benefit them. Internal agency limitations do not relieve the agency of its professional obligations.
The ruling reflects a growing sentiment in the courts that insurance agents are obliged to perform duties for the clients, even if they might be a burden. The cases vary widely in types of errors or omissions, yet all are easily avoidable.
This is one of many reasons for your agency to be seriously committed to offering life products-including Health and related lines-to all your insureds.