Michael J. Lambert
Phone: 603.627.8137
Fax: 603.641.2373
mlambert@sheehan.com
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What is the most common pitfall in obtaining insurance and how can I protect against it?
Saturday, April 30, 2005
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The most common pitfall stems from the incorrect assumption that an insurance agent has an affirmative duty to inform or advise them about the availability, terms, or sufficiency of insurance coverage. Unfortunately, many businesses do not scrutinize this relationship or the advise provided by the insurance agent regarding the adequacy of coverage until a loss occurs and they discover that they do not have the extent or type of coverage they thought they had.
If you intend to rely on your insurance agent's expertise, you should enter into an expanded agency agreement sufficient to require a greater duty from the agent. That agreement should reflect that the agent is holding him or herself out as an insurance specialist, that you are relying on that expertise, and that they are being compensation for consultation and advice apart from premiums you pay. It is far better to determine and document the scope of this relationship at the time insurance is being purchased than to try to recreate it years later following a loss.
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