DON'T SAY IT'S SO UNLESS YOU'RE SURE IT'S SO
by Curtis Pearsall
Recently, I had a personal situation that could have led to an E&O claim. Every year in August, I take my two boys and my oldest son's best friend down to New York for a Mets game and a Yankees game. This year, instead of taking my car, I talked with an auto-dealer friend who allowed me to borrow a customized van. I didn't rent it, nor was it provided to me as a loaner for my car being under repair.
After checking into the hotel the first night, I went to pull into the parking garage. Little did I realize that the van was higher than the height of the parking garage, and I cracked the top of the van. The damage came to $1,300. When I got back home, I notified the auto dealer of the damage. I also notified my agent, who had me fill out the appropriate claims report. When I asked my agent how my policy would respond, he advised me, 'Don't worry about it, your policy should take care of the damages.'
Unfortunately, he provided me with this opinion without checking with the company. In actuality, because of a clause in my policy, my carrier paid the deductible on the auto dealer's coverage, and the rest of the claim has been submitted to the auto dealer's insurer.
Obviously, a client calling you to report a claim is not a new situation in your agency. But a few situations more important than the one I just described might develop into an E&O claim. What guidance have you provided to your employees when they are asked, 'Is the claim covered?' Do they pull the file to check what form the coverage has been written on, or what the limit of protection is? Or do they say the claim is covered without checking? If you tell clients that their claim is covered and then it doesn't get paid to their satisfaction, you're going to have an angry client on your hands.
This issue can be particularly sensitive with producers who want you to pay off a claim to avoid angering a customer. Here are a few tips that will minimize any potential problems:
Make sure your claims staff is trained in how coverages respond. This may sound elementary, but when I first worked at an agency, I handled S-Z for Personal Lines, Commercial Lines, and claims-and was never provided any training in claims.
Know the authority levels of each of your companies. You don't want to answer questions based on what nonauthorized personnel have told you.
Don't say that a claim is covered unless you're absolutely positive. If there's any doubt or anything unique about the claim, contact the company; it can be a true resource. If you don't think it's covered but want to submit it to the company, let the client know your thoughts and make no guarantees about coverage.
Document phone conversations with the client and the companies. Include the name of the person, the date and the time of the call, and pertinent details. Take the facts down exactly as they were provided. Don't coach them on how a claim might be paid.
Provide guidance on how the claims process works and how long it will take before a decision is made. Clients who are told they will hear about the claim in a week are more patient than those who wait only a day but expected a two-hour turnaround.
As far as E&O threats are concerned, the handling of a claim is where the 'rubber meets the road.' Handling a claim promptly and professionally will keep your clients happy-which is a large part of avoiding E&O claims.
This article originally appeared in the Utica National Insurance Co. E&O Bulletin and is adapted by permission. Curtis Pearsall is vice president, E&O, of the Utica National Insurance Group.