These quick notes are part of our new CE series on the top 100 Insurance Agent Blunders. Knowing the legal and ethical mistakes made by other agents is a practical way to avoid the same blunders in your own business.
Being an ethical insurance agent is also being professional. But, the gesture goes beyond the mere compliance with law. It means being completely honest concerning ALL FACTS. It means more than merely NOT telling lies because an incomplete answer can be more deceptive than a lie. It means more than being silent when something needs to be said, because saying nothing can be the same as a lie.
Take the case of Bell v. O’Leary – Blunder #100. An insurance agent took an application for flood insurance but failed to notify the client that his mobile home was located in unincorporated areas that were ineligible for any coverage under the National Flood Insurance Plan. A loss occurred and the agent was sued. The courts determined that the agent had superior knowledge and failure to give the client a complete answer about the unavailability of coverage took precedence over the fact that coverage for the property was not available from anyone.
Someday, it may be real important for a court and jury to hear that you have a history of serving clients without consideration for how much commission you made or how busy you were, i.e., you are a person with good ethics.
In Grace v. Interstate Life – Blunder #99, an insurance agent sold his client a health insurance policy while she was in her 50’s. After the client reached 65 he continued to collect premiums despite the fact that Medicare would have replaced most of the benefits of her policy. The court considered the agent’s lack of duty to notify his client a serious breach of ethics.
Read about these cases and more in our Preferred Practices Course # 171.