Q. What happens if I recommend the wrong insurance for a client?
A: Failing to recommend insurance accounts for over 5 percent of all E&O Insurance lawsuits against insurance agents. It's a sizeable chunk of your professional liability.
The good news is that mistakes like this can be covered under an Errors and Omissions Insurance policy designed for insurance agents. If a client sues you after you make a mistake recommending coverage or inaccurately explain a policy, E&O pays the cost of your lawsuit.
How do I avoid recommending the wrong insurance for a client?
When an insurance agent makes a mistake, it's often because they've stepped out of their comfort zone. Typically, insurance agents make a bad recommendation by offering an opinion on a type of coverage they don't know particularly well.
If you're a property and casualty insurance agent, you should be hesitant to make any recommendations for policies outside your expertise. Often, clients will want your opinion on all sorts of policies, but stick to what you know.
Alternatively, if you'd like to expand your offerings with new types of coverage, seek out education in these new areas.
Another common mistake is selling too little insurance to a client. If you sell to commercial clients, ask them for revenue estimates and other figures that will give you an accurate idea of the amount of coverage they need. For non-commercial clients, make sure you get accurate representations of property value and other risks they need to have covered.