Proof. There’s nothing like it when it comes to a lawsuit, and in an industry directly related to preventing or recovering financial loss – the insurance industry – proof and documentation are essential. Consider a recent, high profile case involving a celebrity and his insurance agency, Wells Fargo Insurance Services. The plaintiff sued the agency in an attempt to cover losses he incurred when his son’s 2007 car accident injured a friend, and his limits on the policy were not sufficient to cover the friend’s settlement.
The plaintiff had an auto policy with a limit of $250,000 per vehicle. He owned both cars involved in the accident, but fell short of the combined 500,000 limits. The plaintiff had to cover the excess out of pocket, thus forcing him to do what so many faced with financial loss due to insufficient limits on their insurance do; he sued the agency. As broker’s, we know how detrimental gaps in coverage can be, and it is our responsibility to notice such gaps and recommend filling them. However, recommending appropriate coverage doesn’t always mean the client will pay attention to our advice. Adults can be terrible listeners.
Long story short, the plaintiff’s lawsuit was dismissed by a Florida judge, and the beleaguered celebrity was left pinned to the proverbial mat of proof. He had to accept a nuisance settlement offer just to avoid paying Wells Fargo’s costs. The reason behind this injustice? Wells Fargo had proof; documentation showing that not only had umbrella coverage been offered to the plaintiff’s now ex-wife, but it had been offered several times, the last of which was only 4 days prior to the accident. The proof turned an otherwise costly case for Wells Fargo into a seemingly frivolous lawsuit. His lawsuit alleged malpractice, claiming that his broker should have protected his substantial assets with an umbrella policy. Indeed, a knowledgeable broker would protect his or her clients with the appropriate amount of coverage, in this case an umbrella policy. Without proof, the plaintiff may very well have won this case. In fact, the win would have most likely been a quick one. However, Wells Fargo’s due diligence in both offering the important coverage, and documenting those offers even when they were refused, created another outcome entirely. Wells Fargo protected itself from a major loss and formulated a perfect learning experience for brokers everywhere.
Documentation is essential to good business practice in the insurance industry. It is imperative that you document conversations with clients; for the client’s benefit as well as your own. Documentation isn’t just to protect yourself in the event of a lawsuit. Our brains are not capable of holding infinite data and every detail within each of our client’s files. It should be the responsibility of a broker to check in with their clients at least annually and assess their current coverage, current situation, and look for any gaps. In this electronic age, it’s easier than ever to communicate with your clients as well as to document that you have done this. It will not only help you make sure your clients are properly protected, but it will protect you just like it protected the broker in this case.