 Selling
Personal Lines –
Good From an E&O Standpoint?
by Curtis M. Pearsall, CPCU, CPIA
Special Consultant to the Utica National E&O Program
I am not sure if this is my imagination
or not but it certainly appears that there is a resurgence
from both companies and agencies to sell personal lines. There
is no doubt that with the proper technology and the right carriers,
selling personal lines can be very rewarding.
W hen you combine Personal Auto, Homeowners, Dwellings, Personal Inland Marine, Personal Wet Marine, Personal Umbrella and Flood, more than 40 percent of all E&O claims come from the sales and service of Personal Lines. From the E&O claims perspective, the main issue that seems to differentiate Personal Lines from Commercial Lines is the size of the claim. While there are more claims involving Personal Lines, the claims tend to be smaller. When there is an E&O claim in Commercial Lines, the average severity is over double that of Personal Lines.
When focusing solely on the Personal Auto coverage, there are two main drivers of claims. One involves uninsured motorist coverage and the other is physical damage. On the UM side, have a standard operating procedure requiring your staff to at least offer UM coverage equal to the limit of liability. In the event the insured does not want the higher UM coverage, many states/companies require some type of sign-off form. Obviously, do not sign for them and make sure you know the expectations regarding which Named Insureds should sign the form. Some states require all Named Insureds; know the requirement. Even if the state does not require a sign-off form, a good agency practice is to get the insured’s signature acknowledging they do not desire this coverage. This documentation will be key if a claim is made against your agency.
Regarding physical damage, documentation is crucial. Whether the insured states they do not want physical damage coverage or only want comp and no collision, get it in writing. Although chances are these claims will not necessarily be big claims ( probably less than $10,000 ), chances are that based on the size of your deductible, you will wind up paying most of this out of your pocket. Do the right thing and document the discussion. |
| When dealing with Homeowners, some claims involve liability, but the majority of claims deal with property. Oftentimes, it is an issue dealing with valuation. It is important to make sure that with the rising price of plywood and other building materials, a concerted effort be made to keep your customers insured to value. Since many policies have built-in provisions addressing this, know how your companies handle this. In addition, while the premiums associated with Homeowners might not be that high, I strongly suggest you see the premises you are insuring. It is advisable for you or a member of your staff to visit the premises and take pictures while also observing any unique characteristics. Whether that involves a woodstove, a trampoline, a dog, a pool, etc. is valuable information. If you know the home is in close proximity to a river or stream that could overflow, this would give you a great opportunity to discuss flood insurance. Although there is no doubt that with the recent catastrophes, most homeowners know flood coverage is not included, isn’t your goal to properly protect your customers? |
Many folks feel that
selling personal lines is easier than commercial lines. After
all there are less products and more standardization of forms.
However, there are areas where, if not properly handled, E&O
claims could occur. Taking a little extra time to do the
right thing could save you considerable dollars later.
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