Importance of Reviewing Limits with Your Clients

From nuclear verdicts and social inflation, to increased costs due to supply chain disruptions, the limits your clients carry may not be adequate to cover their claims.

For an agent, this results in exposure to E&O claims due to clients being underinsured. Virtually every agent has clients whose property values are insufficient.

There are actions that can help you avoid or mitigate an E&O claim in the event a client has an underinsured claim.

HOW TO HELP PROTECT YOURSELF WHILE BEST SERVICING YOUR CLIENTS

• Communicate to your clients that they should review their limits and assess if they are sufficient for their risk. While you can offer guidance, refrain from recommending specific limits or making any statements confirming that the limits provided are adequate to respond to a claim. 
• Be cautious when using insurance-to-value tools. They may be outdated and not reflect current conditions.
• Offer multiple limit options. Have the client acknowledge that additional limits were offered, and they have independently chosen the option that they feel best meets their needs. Be particularly cautious when a client is reducing limits.
• Use disclaimers on your coverage proposals.
• Document discussions regarding limits in your file. Further reinforce them with a written communication to the client reiterating the conversation. 
• Sending auto responders

This information and any attachments or links are provided solely as an insurance risk management tool. They are derived from information believed to be accurate.  Utica Mutual Insurance Company and the other member insurance companies of the Utica National Insurance Group (“Utica National”) are not providing legal advice or any other professional services. Utica National shall have no liability to any person or entity with respect to any loss or damages alleged to have been caused, directly or indirectly, by the use of the information provided. You are encouraged to consult an attorney or other professional for advice on these issues.