Don’t Cut Corners
Don’t Cut Corners07.06.2018
A landlord asked his longtime agent for a landlord’s insurance policy for a number of residential rental properties he owned located near an elementary school. The agent had a busy day filled with appointments so he was only able to squeeze in time to stop by his client’s property between appointments. The agent looked at the exterior and took a number of cell phone photos. Because the exterior appeared to be well kept and in good repair, the agent felt that strict compliance with the carrier’s underwriting guidelines requiring detailed exterior and interior inspections was unnecessary. Sometime later the client called to report that a parent rushing to pick up her child had inadvertently struck the corner of the house with her vehicle causing significant structural damage. When he visited the property again the agent learned that it was being used as a child day care facility, which would have been apparent had he done an interior inspection during his initial visit. Although the type of business was excluded under the carrier’s policy, the carrier elected to settle the damage claim and pursue an E&O claim against the agent to recover its loss.
Risk Management Tip:
Binding a carrier to an ineligible risk happens all too frequently, and is perhaps the easiest risk to avoid. Always comply with the underwriting guidelines of the carrier you represent, and never give in to the temptation to cut corners no matter how busy your schedule is. Strict compliance to agency underwriting guidelines should be an integral part of every agencies risk management program, together with regular auditing to monitor compliance.
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