Adding Value? Who Cares? And, who gets mad?

[d's insurance store]

This is a smaller agency, positioned to deliver high touch service and advice mostly in the personal lines area.

So, the other day a client calls regarding a potential homeowner policy claim. The policyholder is asked for a brief description of what happened, and the story is that they are being sued and their attorney suggested filing a claim to see if there might be payment for defense. And what, I asked, are they being sued for? Answer: It's a frivolous lawsuit regarding the failure to sell certain items and breach of contract to perform in a seller's capacity.

So, I make a spot and snap decision, knowing there is some, but not a lot of claim history on this homeowner policy. I decide to 'add value' to the equation and offer advice.

I say in no way shape or form am I telling them not to file a claim, but this sounds like a business deal gone bad and business liability is not likely to be covered under the personal lines homeowner form (these items that were alledged to have not been sold have nothing to do with the homeowner's primary source of self employed business income...completely off the grid). I tell them that I'd be happy to send them updated copies of the policy jackets for both home and umbrella and I suggest that they send both to their attorney and ask him to read them to be very sure there will likely be coverage before filing a claim. Why? Well, I give an explanation that is familiar to me and my clients about filing too many claims, too frequently, and how carriers can and will non renew and count claims against them even when coverage is denied, and how I would not suggest filing a claim with very little likelihood of coverage and how attorney's are prone to just throw a claim up against the wall to see if anything sticks and besides, the attorney isn't going to pay the higher premium if the homeowner is cancelled for cause, and so on and so on...I'm sure many of you know the drill.

Was this advice taken is good spirit? No, in fact a number of emails ensued accusing me of refusing the claim without hearing about it, and why carry insurance if it can't be used, and how if they're threatened with non renewal, then perhaps they should find an alternate agency and coverage and how I was rude and condescending and they now deserve an apology. Then there was the phone call from their attorney. Friendly enough, but I couldn't figure out if I was being trapped into saying something that could be used against me. The attorney admitted he couldn't find coverage, another lawyer at his firm more familiar with insurance stuff couldn't find coverage, but then he asked me point blank, if I thought there was any way for defense on this one...and, not taking the bait, I said I was in no position to render a claim conclusion and a claim would have to be filed to determine if coverage existed.

So, when all is said and done, it will be a harder decision the next time if I'm not specifically asked to give advice to go ahead and voluntarily offer my counsel. This is one where my agency isn't going to win with the client...counsel ahead of time and get accused of impeding the claim...don't say anything and have the policy non renew for claim activity and get accused of not 'warning' them of the potential outcomes. More and more, when a client calls and leads the conversation with I want/need to file a claim, I just shut up and start the process and not offer advice, and I can see that going forward, I will just keep my mouth shut more often unless asked for an opinion.

That's why we get paid the big bucks. Able to add value, but nobody cares.

[sacman]

This is a case of damned if you do, damned if you don't.

If you don't give them the advice that you did and they took a rate increase or non-renewal
they would complain that you didn't inform them of that possibility.

I would have handled the situation in exactly the same way.

I know it's tough to swallow when a situation like that goes bad, however, you WERE doing your job.
Giving insurance advice. You are NOT GEICO. It is not your issue if you provide sage, professional advice and
the customer doesn't like what they hear.

How many times have you done a quote for somebdoy that has several claims for $300 -$500 and you have to explain to them that those claims will affect their eligiblity and pricing on your quotes. How many times has the customer said, 'my agent never told me that.'

IMHO, you handled the situation in a responsible, professional manner. Don't allow one jackass customer to sway
you from continuing to provide your professional advice to the rest of your clients. Most of them DO care and appreciate it.

BTW, Why are they calling their personal lines agent instead of their commercial policy agent?

[Kay-WA]

I agree with sacman. Keep doing what you do and don't let it get you down. Happens all the time, we provide good information but how it is received is out of our control. Good to vent though, right?

[surestart12345]

The customer is never going to be happy when they hear less than stellar news...plus they hear what they want to hear: aka selective hearing. The attorney was probably trying to bait the agent also as he was going on a fishing expedition making the client hopeful that their legal costs may be taken care of by their home insurance policy.
We are independent insurance agents and our firm agency policy is to not provide any advice or assistance whatsoever as we are not authorized to by contract with the insurers, we are not trained in the claims process and other than providing basic claims information that is out there on the internet (basic tips/advice), we do not get involved at all. We just tell our customers to call us if they feel that they have been treated unfairly or rudely by the insurer. Putting ourselves in the middle of a claim or an attempted claim is futile. We will tell them that even if the insurance company pays out zero, that the claim will count against them in their 'insurance score' and insurance history...they usually don't like to hear that either!

[rodgwag]

I never get involved with claims and I let every insured know that up front. If he or she wants to file a claim let them. Either way if you don't get involved with claims you will sleep like a baby.

[rodgwag]

We are independent insurance agents and our firm agency policy is to not provide any advice or assistance whatsoever as we are not authorized to by contract with the insurers, we are not trained in the claims process and other than providing basic claims information that is out there on the internet (basic tips/advice), we do not get involved at all. We just tell our customers to call us if they feel that they have been treated unfairly or rudely by the insurer. Putting ourselves in the middle of a claim or an attempted claim is futile. We will tell them that even if the insurance company pays out zero, that the claim will count against them in their 'insurance score' and insurance history...they usually don't like to hear that either!

This paragraph was brilliant!

[d's insurance store]

Here's the follow up...about a week ago, a thick envelope arrived from a law firm...it was the tender for defense coverage to the carrier along with the full legal complaint. So, the claim has been filed for defense costs.

With the disclaimer that I am not an attorney, as I read the complaint, it appears to clearly be a case of contract liability, with all of the causes of action making note of multiple failures to perform in a seller's capacity, with no mentions of personal injury. The cover letter states that the $3 million lawsuit appears to be bogus, as the plaintiff has never produced the so called contract in dispute, but nonetheless, the insureds/defendent's attorney is trying to get paid from the personal policy.

I placed a call to a claim executive of this carrier, and stated that I was not asking for a final determination, but rather an idea of how a claim like this might be handled. Based on my summerizing what I saw in the complaint, the claim manager laughed and said he gets these kinds of claims all the time, and they're usually denied under the business exclusion language of a personal lines policy. He said he wished his claims handlers could devote their time to 'real' claims rather than researching and deflecting claims such as this, but the conclusion was that coverage would likely be denied.

[Been around]

From many years of experience on the company side, I always advise agents to have policyholders submit claims when the value of the claim is not easily determined. A $1,000 wind, water or theft claim is completely different from a potential $100,000 first party claim or a liability claim that could have substantial legal fees involved even if there is no coverage for indemnity. Its much safer to tell an insured not not submit a claim with a known value of the cost/benefit ratio.

Liability claims should always be submitted. The duty to defend is broader than the coverage for indemnity and is complicated in almost all states by the fact that the policy language is only a starting place in coverage determination. In both first and third party claims state laws, case law and insurance department regulations (that are not part of the policy) determine coverage as well. Many of the court decisions are decades old. These are areas best left to claim professionals and attorneys. Courts have been incredibly imaginative in interpreting coverage - most often in favor of a policy holder.

A $1,000 E&O claim is easier to swallow than $500,000 if the agent makes the wrong choice.

[sacman]

@been around-

Your advice makes a great deal of sense, however there appears to be another side to this story.
Just playing devils advocate, not attacking your opinion.

What would you suggestion be for an agent where his client works at the local jiffy lube and forgets to put
oil back in a customers car. 5 miles down the road the engine blows and jiffy lube wants to hold your client responsible instead of going through their policy. Client asks if that is covered under his home insurance policy.
Do you A) advise him that this does not appear to be covered under his personal home insurance policy. That although he may submit a claim it could have negative consequences regarding price/eligibility regardless of whether it is covered or not. Or B) submit the claim.
It's no cake walk issuing a home policy with a liability claim on the clue report.
If D's customer is going to sue over this matter, what recourse do you think they will take if their policy takes a rate increase or is non-renewed due to submitting claims and weren't informed of the possible consequences?

[gypseybroker]

Adding value?
What value are you intending add, d's insurance?
Are you adding value to your agency by preventing what you deem a frivolous claim?
Are you adding value to the insurance company by screening what you deem a frivolous claim?
Are you adding value by educating the insured on what you know & deem, based on industry practice & your experience?

Who cares?
The insured certainly doesn't care about your attempt at added value. Whether their intent was to file a frivolous claim ore they really didn't know and were doing nothing more than following the advice of their lawyer. Their lawyer, who in their minds, has now been insulted by your additional value in educating them on why insurance companies see & have to handle frivolous claims.
The lawyer certainly doesn't care about your added value....in fact, she might just feel as if you provided her a compliment, albeit backhanded. Who comes off more professionally in this case? The lawyer providing the natural advice of "file a claim when you get suit papers" or the insurance agent who dusts off his soap box to fully educate the insured, based on his experience, what the lawyer should be doing.

And, who gets mad?
Seems like everyone does, including you....because the student-insured failed to "get" your lesson.

Does the principal of your agency see the type of value you add?
Was your attempt at schooling the insured worth it in the long wrong?

Your cavalier attitude towards adding value is abhorrently present from the start of your "vent". Since, as you repeatedly claim, you are not trained in the claims handling process, nor are you trained as a lawyer & therefore able to interpret policy language, what is the value you wish to convey?

Sadly, it appears, that the opportunity you had to truly provide value but listening to the insured's complaint, not providing commentary, or offering to send copies of the policy again to be reviewed - how condescending. I hope they moved their policy to another agent & company.....and ultimately, I agree with you regarding frivolous claims.....

Next time, I suggest hearing the insured, extending empathy, explain what your duties are only (ie - put the company on notice & that's it), and provide true value by staying in touch with both the carrier and the insured until the claim is closed. If you thought the claim was frivolous & handled it that way, wonder what the outcome could have been? The time to educate the insured regarding the state of the insurance industry is not when you get the first phone call just after the insured spoke to their lawyer who told them to file the claim. When you got the very first call, the insured had their mind made up to file the claim. I argue that your attempts at putting the insured in their place only escalated the process itself.

Adding value....not in this case.

[FFA]

A sad case of danmed if you do, damned if you dont. Currently have one going on where a client did a side job that went wrong. Was contacted by the carrier before I heard from insured. Claimnt gave them a copy f the check she paid him with and he says she bought him a bottle of Captian Morgan. MAke it worse, he is a personal friend whom I warned about side jobs going wrong. I'm not coming out any good on this one either.

[d's insurance store]

I have concluded, based on this experience, that going forward, if a client calls and says 'I want to file a claim', I will shut up and facilitate that process. As someone else noted here, I will sleep better at night, knowing the claim process will unfold as it contractually unfolds.

Should someone call and ask 'What should I do?', then I will, on a case by case basis offer choices. My position will be that the client ASKED for advice and I have professionally offered advice and alternatives.

I guess there are times when I elevate my self importance in people's lives, when in fact, I'm most often available for quotes, policy service and claim facilitation. From this point forward, I am going to limit my unsolicited advice.

[earlybird]

"Adding value" or doing what you are required to do as an agent of the insurer, is the question. Knowledge to the agent is knowledge to the insurer. If you dont report the insured's "claim" you have left yourself wide open to an error and omission claim and possibly a "bad faith" allegation as well.
Back in my former career as a claims adjuster we called the "bad faith" claims that arose from agent's errors, " extra contractual liability." That is money paid to plaintiffs outside of or above the policy limits. As I advise our retail agents, "your job is to facilitate communication between the insured and the insurer, not to make decisions for the claims department."

[jackwehoca]

I would suggest to the policyholder that the policy be read and follow the Claims Reporting Procedures that is made part of all policies. You can offer to forward a claim but strongly suggest that the policyholder send certified mail or Priority mail signature delivery confirmation all the facts surrounding the claim. Do not volunteer any opinion as to the validity other than to point out (if you must)the fact that a claim, once reported, goes on the carrier's loss run report and will follow the policy holder. To use the military philosophy:do not volunteer anything. Nothing to gain, lots to lose. Even commenting on the loss run scenario can come back and bite you-the policy holder will conveniently forget the context in which the advice was given and state that you, the agent, suggested no claim be filed since it will affect future policies in availability and premium. Fortunately has not happened to me, but I know others to whom it has. Convenient forgetfulness on the part of policy holders...is called "blame the agent".

[mccluney]

I am somewhat bemused by all of the posts on this issue. It is my understanding in CA under the California Fair Claims Act and included in most agent-company contracts is somewhat the following: "if the agent/broker has constructive notice of a claim." The claim must be immediately reported to the carrier. If the claimaint decides not to pursue the claim he can relate that to the claim rep. The worst thing an agent can do is to deny that there is coverage for an incident and not report the incident to the carrier. Policy language has different interpretations in different jurisdications as to what claim is covered or not covered.

Report the incident.