7 tips for agents to avoid E&O claims following a natural disaster
In 2024, the U.S experienced 27 weather and climate disasters that caused at least $1 billion in damages, according to the National Oceanic and Atmospheric Administration (NOAA), placing 2024 as the fourth-costliest year on record. These billion-dollar disasters included drought, flooding, several severe storm events, such as tropical cyclone events, winter storms and one wildfire.
Natural disasters are becoming more frequent, resulting in significant financial losses and exposing inadequate insurance coverage—including gaps in clients’ insurance coverage that lead to increased errors & omissions claims against agents.
Pitfalls stemming from uncovered losses include failure to place the proper coverage, failure to recommend appropriate business protection coverage or placing coverage with inadequate limits.
An agent is more likely to be drawn into litigation when a client is disappointed with the amount of payment for a claim or when a client has misunderstandings regarding provisions found in the policy. Here are seven risk management prevention tips that agents should follow to avoid E&O claims after a catastrophe:
1) Document all interactions. Document all coverage-related conversations with your customer, whether it was a phone call, an office visit, an annual policy review or providing quotes at renewal. It is important to document what was discussed and what coverages were offered.
2) Confirm coverage offered and rejected. Obtain a written rejection of coverage for all coverages not taken by your customer. Follow up with your customer to confirm what coverages were offered, which ones they requested to bind and which ones they rejected.
