For insurance agents, lawsuits can be a nightmare. You may be worried about the financial future of your agency, as well as your reputation. You may also feel guilty about the incident that triggered the lawsuit, or angry that you’ve been unfairly accused when you’ve done nothing wrong. Take steps to protect yourself from insurance client lawsuits.
Common Allegations in Insurance Client Lawsuits
Insurance agents have an important job. The coverage you sell can make a big impact on your client’s finances, health and future. If something goes wrong with coverage, and if the client experiences a financial loss because of it, you could end up being sued.
Insurance client lawsuits typically involve some sort of alleged mistake, breach of contract, misrepresentation, or negligence. For example, a client may allege that you provided incorrect information about coverage, like saying a Medicare Advantage policy included dental coverage when it didn’t, and the client had to pay for expensive dental care out of pocket as a result. Or a client could allege that you missed a deadline to submit an insurance application, leaving the client without coverage.
Note the “alleged” part. You don’t actually have to do anything wrong to be sued. You just have to be accused of having done something wrong. If you can’t prove your innocence, you could lose the lawsuit, and even if you win, the legal process can be expensive and time-consuming.
How to Protect Yourself from Lawsuits
There are multiple things that you can do as an insurance agent to help protect yourself from lawsuits.
- Work diligently. When you’re overwhelmed, you may feel pressured to rush through appointments and processes, but it’s important to maintain a consistent high level of conscientious service. This includes double checking everything.
- Review your clients’ needs carefully. If you conduct a thorough needs assessment, show your clients that they’re in good hands, and follow up with annual coverage reviews to see if their needs are still being met, your less likely to experience conflict.
- Explain things clearly and precisely. Misunderstandings can lead to problems, and problems can lead to lawsuits. Don’t gloss over important details or offer vague reassures. When going over important plan details, requirements, or risks, it’s important to provide clear and precise explanation and to make sure your clients understand you completely. To verify comprehension, ask questions and have them repeat information back to you. For high-stakes issues, such as when a client rejects your coverage recommendations, it’s better to get it in writing with a signed waiver of liability.
- Document everything. If you are ever accused of negligence, strong documentation will be your best friend. If a lawsuit happens months after your interaction, you might not remember the details of your meeting, and even if you do, it can become a case of your word against theirs. Keep records of your work, including your client conversations, recommendations, and enrollment decisions.
- Stay up to date. Keep up with your training and continuing education requirements, as well as trends and developments in your industry, so you can stay compliant and offer up-to-date advice.
- Maintain E&O insurance. If you are sued, errors and omissions insurance can cover your legal costs, including your defense and any awards or settlements, up to your policy limits. E&O insurance protects you financially, and it means you don’t have to face the lawsuit on your own.
Did you know that PTT agents have access to E&O insurance? It’s one of the many perks of partnering with PTT Financial. Learn more.