Insurance agents and brokers need to communicate effectively with their clients in order to avoid professional liability (E&O) claims. Another article in American Agent & Broker (see here) refers to a case in South Dakota which turned on this point. In this case, an important question of fact was whether the agent had communicated to the client that the requested coverage was not provided.
Most insurance agent and broker professionals know that documentation is critical in avoiding insurance agent and broker professional liability insurance claims. This case goes a bit further in noting a widespread requirement for an affirmative communication from the agent to the client that certain coverage has not been placed.
The court noted that numerous cases have determined that if an insurance agent is unable to procure insurance coverage according to a client's instructions, the agent has a duty to notify the client of his or her failure to do so. Whether the agent in the case at hand breached this duty, the court said, was a question of fact for a jury to consider.