‘Take The Kid Off My Policies…’ What Should Your Insurance Agency Do?


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by Curtis Pearsall, CPCU

Recently, a long-time agency associate contacted me; during our conversation, he advised that one of his customers (a lawyer) had contacted his agency and instructed the CSR to take his kid off his policies because the child had permanent residence elsewhere.

If this call came into your agency, what would you do? What should you do?

This is a common occurrence as our kids graduate from college and leave home to pursue their careers. In the parent’s desire to reduce their own insurance premiums, at times, the phone call to the insurance agency probably occurs right after the final goodbyes.

If this scenario occurs at your agency, one of the first questions to your customer should be “Does your child know you’re taking them off your insurance and have they secured coverage elsewhere?” They might comment that this isn’t their problem. Whether it’s their problem or not, it can definitely be your problem if a loss occurs and the carrier denies it

Obviously, it’s prudent to get complete information and to discuss the matter with the customer in detail. The customer needs to understand the insurance implications and what the next steps are. Because a variety of coverages might apply, be specific with the discussion. Review each coverage – Homeowners, Auto, Inland Marine, Umbrella, etc. – to make sure the customer realizes the impact of their request and the potential impact on their child if something happened.

Also, make sure that your file documentation reflects: (1) the specific questions you asked; and (2) the client’s answers. To address any potential misunderstandings, send the customer an e-mail or letter with the documentation of this conversation.

This scenario is a potential disaster waiting to happen. If you were to follow the customer’s request and a problem occurred, they could come back and allege that you did not advise them properly about the issues. Following the steps discussed above can prevent this from happening.

Curtis Pearsall, CPCU, AIAF, ARM, CPIA, is president of Pearsall Associates, Inc. (Whitesboro, NY), a risk-management consulting firm that specializes in helping agents protect themselves against E&O claims. To contact him, call (315) 768-1534; e-mail: [email protected]; visit www.pearsallassociates.com; or blog: www.agentseotips.com.

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