Claire-ification

Are you a member with a question? Then contact IA&B VP-Advocacy Claire Pantaloni, CIC, CISR at 717-918-9202 or ClaireP@IABforME.com.

QUESTION:

One of our producers doesn’t want to deliver the policy to customers because it makes it easier for them to provide a copy to another agent. What can I tell him?

ANSWER:

What you can tell him is that failing to send the policy to the policyholder is a significant E&O exposure for him and for the agency.

WHY IT’S AN ISSUE

When there is a dispute over the coverage provided, the insured’s duty to read the policy is one of the first lines of defense in an E&O suit. When the insured is not provided with a copy of the policy, that defense vanishes. The logic is simple: An insured cannot be expected to review the coverage she has and the applicable exclusions, and to voice any questions or concerns with the agent, if she wasn’t afforded a chance to read the policy in the first place. Yes, we all know that few policyholders will read their policies before a claim occurs, but it is irrelevant here. An agency that has not given the insured her policy is giving up the duty-to-read-the-policy defense, period.

DO NOT WAIT

Not only should the policies be delivered, but they should be delivered as promptly as possible. Some producers may be tempted to wait and schedule an appointment with the customer to hand over the policy in person. For some busy customers, however, scheduling is easier said than done. Days can turn into weeks, and weeks into months, and the duty to read the policy is once again not triggered.

With the ability to send documents electronically, delivering documents quickly is literally at anyone’s fingertips. Agencies should keep in mind some basic but important facts:

1) Emailing a file in PDF to a customer is an electronic transaction, subject to specific legal requirements. What those entail is a question for another article, but the requirements should be reviewed to ensure your agency is dotting its i’s and crossing its t’s. (Spoiler alert: if you can’t wait for the future article, we have a full resource on our website at IABforME.com/ electronic-transactions to help you do just that.)

2) Any personally identifiable information that is sent electronically should be secured. Privacy laws and regulations have proliferated in the last two decades, and whether you use a dedicated encryption platform or embed encryption in your day-today email exchanges, be mindful of the requirements to protect your customers’ information.

Ultimately, and in addition to providing a defense for the agency, a customer’s prompt receipt of a policy also reflects better on the agency.

This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Insurance Agents & Brokers nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.