Personal Lines - Renewal Letters? E&O Prevention

[Smalltownagent]

I'm just curious about what other agencies do when protecting themselves from E&O situations arising from insureds who all of the sudden decide to buy a new tractor, add on to the house, purchase a $30,000 ring, etc. without notifying the agency.

I've asked some other colleagues and some of them just cross their fingers (what we've been doing, aside from speaking to them whenever they call or come in) and some send out letters at every renewal. A generic letter of, "Please come in or call for a policy review to make sure you are adequately and properly covered. Please remember to always call us if anything changes."

Do you all have a system in place to notify customers to contact your agency? Something you can hold up to the attorney saying, "See, right here we mailed them this letter stating to contact our office if anything changes." If so, is this something you do for every customer (even the non-standard dwelling fires?). At every renewal? Would something like this even help at all in a potential claim scenario?

This litigious society has me on pins and needles every time I get a claim declination from a company.

[kfrasier]

We have what we call a Family Risk Questionnaire that is sent on all personal lines customers. It is sent on every single personal lines customer annually. Actually all of our commercial lines, individual, and group benefits customers in our agency get some kind of questionnaire annually too. It is automated though our agency management system so they print automatically during our closeday procedure in WinTam. There is a disclaimer that states that if we don't hear back from them we will assume that there have been no changes.

[rodgwag]

In a recent court case in California a judge decided that agents are not responsible for reminding clients to make monthly payments, renew, or add coverage for a new item not previously insured unless the agent has done so in the past. In other words don't hold your clients hand unless you want it to become mandatory for you to do so. I let Travelers, Hartford, Safeco and any other carrier that has the facilities handle their own client's service. Retention is better and I don't have to hire as many people as before.

[surestart12345]

Do you know the particular court case name for a proper citation?

[Smalltownagent]

That family risk questionnaire sounds interesting. I thought about something like that, but then I worry about if we left off one specific thing that came up and was the reason for the denial in coverage. Plus, it sounds like a family risk questionnaire wouldn't hit on some of the conditions/exclusions in the policy.

It almost seems like a broader/blanket type of letter could cover more bases, but I guess it might hold less water in the case of a court. Something along the lines of "...please read over your policy carefully and contact us if you have any questions. Life changes often, therefore your insurance needs will change with it. Please contact our office for a policy review to make sure you understand your policy and that your policy is adequately addressing your needs."

I would be nervous just to sit back and rely on a court case somewhere indicating that we didn't have that responsibility. Perhaps something as easy as a letter sent out each year could help deter a lawsuit from the beginning? I guess it is all some sort of a gamble in the end.