Although errors and omissions (E&O) claims resulting from floods typically rise and fall with weather-related disasters, risk mitigation needs to be at the top of one’s mind when offering new or renewal property coverage to reduce exposure. Use these five approaches to help reduce E&O exposure from Flood Liability.
1. Understand. The agent’s understanding of flood insurance and the representations made to the client need to be explained clearly and accurately to avoid an E&O claim.
2. Explain. A flood policy through the National Flood Insurance Program (NFIP) requires a separate application and premium for each location.
3. Options. Since there is an exclusion for floods under a basic property policy, the agent should always provide clients with the possibility of purchasing flood coverage.
4. Document. The proposal formats used by the agency should be consistent and should provide an explanation to assist the prospective client in understanding flood exclusions and available coverages through programs such as the NFIP.
5. Signature. If the client declines coverage(s), sign-off on the proposal should be secured.
Understanding flood coverage and exclusions and effectively communicating and documenting with clients are crucial.
The material contained in this article is for informational purposes only and is not for purposes of providing legal advice.You should contact your attorney to obtain advice with respect to any particular issue or problem.