Licensing laws also exist to protect consumers from illegal practices that used to be fairly common among insurance agents. State insurance bureaus are the cops who do a very good job of protecting the public. Consumers have a job to do, too. There are a few ways you can protect yourself and your assets.
Communication is key. In last month’s column, I said to make sure your insurance agent knew who owned what, what name it was under, whether it was corporate owned, and who operated the business so each entity was named on your insurance policies.
Shortly after writing the column a long-time client called and wanted to make wholesale changes to his insurance because he was cutting employees and downsizing. He wanted to cancel his umbrella coverages, reduce his fleet insurance, cancel his directors and officers (D&O) insurance, cancel his professional liability (E&O) insurance, cancel his general liability (GL), and get rid of his workers’ compensation coverage. He said that he had a larger personal umbrella and wouldn’t need a lot of those other coverages.
There are a few lessons here.
First, it was a phone call. Even in a face-to-face meeting, there must be written notes to catalog a client’s wishes so that the appropriate response can be made.
What is the time frame for these cuts? Was his corporation (or corporations) still operating?
The types of insurance that he carried were time sensitive as to when a claim would be honored so he needed counseling as to how those coverages applied and when (and if) they should be cancelled.
It was my job to get any request from him in writing then acknowledge these requests in writing, pointing out any areas that could not be cancelled. Most businesses want to go paperless but there are many times when putting it in writing will save your hide.