What is the #1 Cause of E&O Claims? Inadequate Coverage!

 

The issue is not rocket science, nor brain surgery, and not even chemistry. The simplicity of the problem makes for a really simple solution: Sell the right coverages!

I suppose another solution is to advertise you are incompetent so that your standard of care is nil. I am never sure why so many agents are so taken aback when I suggest that if they do not want to sell the right coverages, they should let prospects know they are incompetent. For some reason, they seem to think they should not have to notify prospects of their incompetence. In other words, they seem to want to be perceived as professionals while acting incompetently.

What is the best solution for selling the right coverages? Know your coverages. I find people who know their coverages sell more coverage. It is so much easier to sell a product/service you understand. For example, I find producers who have a good understanding of business income sell more business income. When I ask producers who do not understand business income why they do not sell more business income coverage, the most common response is they do not understand the coverage and/or how to help clients complete the income estimate sheets. It is funny how knowing what you are doing is such a great aid to convincing clients to purchase coverages they truly need.

Additionally, when producers know coverages and the prospect/client foregoes purchasing a coverage they most likely need, most producers find it easier to push harder because they have the confidence their knowledge provides. This knowledge gives them the conviction to push. It is hard to have conviction without knowing the coverage.

Furthermore, if an insured still does not buy the coverage, people that understand their coverages seem better prepared to discuss how the insured, in deciding to self-insure, should prepare themselves and their balance sheets in the event of a claim.

If you want to minimize your E&O exposures, increase your sales, and better protect your clients, learn your coverages. Contact us today to learn about our unique Three Dimensional Training® program to help your producers build their coverage knowledge!

NOTE: The information provided herein is intended for educational and informational purposes only and it represents only the views of the authors. It is not a recommendation that a particular course of action be followed. Burand & Associates, LLC and Chris Burand assume, and will have, no responsibility for liability or damage which may result from the use of any of this information. 

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Burand & Associates, LLC is an advocate of agencies which constructively manage and improve their contingency contracts by learning how to negotiate and use their contingency contracts more effectively. We maintain that agents can achieve considerably better results without ever taking actions that are detrimental or disadvantageous to the insureds. We have never and would not ever recommend an agent or agency implement a policy or otherwise advocate increasing its contingency income ahead of the insureds' interests.

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