Claire-ification

IA&B Vice President - Advocacy Claire Pantaloni, CIC, CISR Are you a member with a question? Contact Claire to find the answer at 717-918-9202 or ClaireP@IABforME.com.

QUESTION:

Is the use of signature flags, highlighters, or x-marks to identify where the client is supposed to sign an E&O issue?

ANSWER:

The use of signature flags, “X” designations, or “sign here” highlights is ubiquitous. It is not a violation of law, and is not, per se, an E&O “no no.” Signature flags are convenient and available in paper as well as in electronic form. The E&O risk is that when using a “sign here” flag, the producer could see one of his customers later claim that he was misled into signing something that he did not intend to sign or selecting a limit that he did not intend to select, or that the producer directed him to pick the wrong coverage.

To mitigate this risk, an agency using a “sign here” flag could do the following:

First, and stating the obvious, take precautions to ensure that the line they are asking the client to sign is the correct one.

Second, attach a cover letter putting the customer in a more active role:

▲ Explain to the customer that the flags reflect the customer’s coverage selections, and

▲ Ask the customer to let the producer know if they notice a discrepancy, have changed their mind about any of the selections, or have questions.

When the client signs the application, he or she is attesting to the accuracy and truth of the information in the application. This is a defense that will be used in E&O claims.

If, like most agencies, you are using an electronic signature product, note that an electronic cover letter or a customized message can generally be added quite easily.

A sample cover letter is also available to IA&B members to use as is or to insert in the e-signature product. Visit: https://IABforME.com/EO-prevention

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.