What Happens When My Insurance Agent Makes a Mistake?
Imagine that you are buying a home with a pool. You tell your homeowner’s insurance agent that you have a pool and ask what coverage you will need. Unfortunately, they do not tell you that your policy needs to cover liability if someone has an accident at your pool. A few months later, a child drowns at your pool, and his parents sue. You file a claim with your insurance agent, and they inform you that you are not covered because you did not purchase the correct coverage. The fault should not lie with you because you tried to do the right thing by getting the proper coverage. However, your insurance agent failed to make you aware of the appropriate coverage. In this case, you may be able to sue your insurance agent for making a mistake by consulting with a Hollywood homeowner’s insurance lawyer.
What Must an Insurance Agent Do?
An insurance agent is in the business of suggesting coverage to Hollywood homeowners based on their particular needs. They must understand what the client needs, ask the appropriate questions to gather all information, and then explain it to the client. When you consult an insurance agent, you are relying on that agent to give you accurate information.
Below are some of the duties of an insurance agent.
Provide Requested Coverage, When Available
If a client requests insurance coverage, the insurer should provide that coverage as long as it is available. However, there are instances when coverage may not be available given a particular situation. In those cases, the insurance agent must explain to the client why there are issues securing coverage and what liability the client may have without being covered. The client can then make an informed decision about whether to proceed without the insurance coverage and will face whatever consequences if an incident occurs without coverage.
Determine Whether Other Coverage is Appropriate
Beyond what a client specifically asks for, an insurance agent has can also help a client figure out what needs the client has and suggest coverage based on those needs. Of course, this requires the client to say what his needs are and not hide any critical information about their needs. For example, if a client had a pool and lied about it to the insurance agent, and the insurance agent did not suggest coverage, then the liability would not lie with the insurance agent. But suppose the Hollywood homeowner lived in an area prone to high flooding, and the homeowner expressed that he did not want to be on the hook for any natural disasters. In that case, the homeowner’s insurance agent needs to have suggested flood coverage.
Inform Client about Coverage
Besides telling the client that they are covered, an insurance agent needs to advise them about the coverage specifics. For example, if the homeowner has purchased coverage that is good for specific home damage but not for hail, the insurance agent must explain the exact terms. Insurance can be confusing, so the insured cannot just say they did not understand the terms. But the insurer does have a duty to at least explain what the coverage is, regardless of whether the client fully understands it.
Limitation of Duties
It is important to understand that insurance agents are not obligated to advise their insureds about their needs. A good insurance agent will take a holistic look at a client’s situation and make suggestions. After all, it benefits them to sell as much coverage as possible. But it is not the duty of the insurance agent to, for example, tell the client exactly how much coverage to get. For instance, if a homeowner values their possessions at $50,000 and a fire wipes out everything, they cannot come after the insurance agent when they discover their possessions were around $100,000 to replace. It was not the insurance agent’s job to anticipate all of the needs or persuade the client that he may need more coverage.
There are, however, some exceptions to the limit of duties. Sometimes, there exists what is referred to as a “special relationship.” A special relationship means that the insurance agent and the insured had a relationship different from the typical relationship between insurers and insured, where the insured relied on the insurance agent’s advice. For instance, if you specifically hired an insurance agent to evaluate all possible hazards in your home, and they are paid for extra advisory services, then that insurance agent may be liable to you for failing to identify risks and suggest coverage for them.
Initiating a Negligence Claim
A Hollywood homeowner’s insurance lawyer can best help you evaluate whether your insurance agent has made a mistake that you can sue for. Negligence, simply put, means that someone failed to use care when doing something. For example, let’s say that you submitted your payment and all of the required documents to your insurance agent to get insurance for your home. A storm occurs, and there is substantial damage to your home. You call your insurance agent, who tells you that there is no coverage available. You later find out that the insurance agent never submitted the paperwork. That insurance agent would be liable. An insurance agent can be found liable for intentional or unintentional actions. Experienced Hollywood homeowner’s insurance attorneys can discuss your case with you and determine whether you may be eligible for damages.
When someone goes to buy insurance, they trust that the insurance agent is giving them all of the information that they need to ensure that they are covered. This is why anyone who is insured should understand their coverage or hire an attorney to explain the terms to them. Many insurance agents will help their clients understand exactly what coverage they have, assisting Hollywood homeowners in avoiding costly gaps in coverage.
Unfortunately, it does not always work out that way for Hollywood homeowners. Contact a Hollywood homeowner’s insurance attorney today if you believe that your insurance agent made a mistake.