Can a P/C agent lose a lawsuit for failure to have addressed the Life needs of a P/C insured who died? Dave Goodwin thinks this is possible, but there are many agents who disagree.
One Western reader wrote:
'It is unreasonable to expect an insurance agent to attempt to sell every product for which he or she is licensed. There is no legal requirement for an agent to determine the need and attempt to sell mutual funds, Life, Disability, Major Medical, Long-Term Care, Medicare Supplement, et cetera while discussing a client's or prospect's Auto insurance. To do so would require that we spend a full day with each possible prospect. We should do a good job of cross-marketing, but there is no legal requirement that we do so.
'We are doing a tremendous disservice to the independent insurance agent if we create additional legal liabilities where none existed before,' he continued. 'I can see the possibility of some enterprising plaintiff trying to convince a judge and jury that the agent violated some fictitious duty, based on your premise. It is extremely important that this point be clarified.'
I wish I could agree, but I can't. The courts have clearly placed on professionals numerous duties of care and delivery of professional advice within their realm of expertise-without the lay-client having to ask the key questions. For example, within the P/C arena alone, many agents run down a checklist asking whether certain exposures exist. For exposures which do exist, many agents will note for their records that the client/prospect declined coverage if the proposed insurance is not bought. Some states even mandate written declinations of coverage when, for example, Uninsured Motorist coverage is declined. Certainly an agent should offer it, even if it isn't compulsory.
Should we wait until heavy damage is inflicted before taking simple loss-prevention steps? It's very easy to ask clients, 'Would you like us to review your Life insurance needs?' Don't wait for the threat of E&O claims to take that simple step.
Here's a sample letter you can mail to your customers.
A REQUEST
Dear Friend:
We are pleased that you have chosen us as your insurance agents for your Property/Casualty insurance. It's a responsibility we look forward to carrying for many years.
Now we have a question for you, a request, and explanations to help guide your answer.
The question is: Would you have any objection to our reviewing your Life and Health insurance needs?
The request is: Call us now to make an appointment; this is a serious and timely matter.
If, for any reason, you have an objection ('I'd like to put those policies away and forget about them; I don't feel like getting into it now'), here are our explanations:
1) Many important changes in policies have developed recently. In addition to product changes, new tax and IRS rulings, new needs, inflation, and other factors often make insurance programs obsolete. Every Life/Health insurance program should be reviewed at least every two or three years.
2) As independent agents, we are free to deal with numerous competitive insurers and can shop the marketplace freely-a freedom which many agents for various companies do not have.
3) We are able to use leverage in your behalf, which comes with our role as a competitive, multi-line insurance agency. Some of the things we know about your lifestyle through your Homeowners and Auto insurance, for example, may be useful in getting credits on your Life and Health insurance. And we may be able to get 'second-policy' or other discounts unavailable to other agents, due to your standing here.
4) Our expertise in Life and Health insurance comes from not only our own staff, but specialists with various insurance companies, as well as distributors, consultants, and others.
There are many other reasons that make good sense for you to call us now for a total review. We deliver solid, professional results. There is no charge or obligation for the review, of course.
We'd like to be your total insurance agency, and we're sure you'll like the results. Call us now!
Your agent