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Getting Sued by Being Too Helpful: Stick to Your Expertise

A fellow "insurance nerd" of mine did a class a few years back titled, "Getting Sued by Being Too Helpful." He presented the class alongside an attorney who specialized in E&O defense. The thrust of the class was that insurance agents should stick to their expertise (insurance), and not venture outside of insurance when giving advice to customers. Here are 10 examples I have run across recently that illustrate this concept very well. All of these situations were presented to me by agency staff, seeking an answer from me so that they could provide an answer to their customer.

1. Golf cart: "Can golf carts legally travel on public roads? If so what roads, and must they be licensed? What safety equipment is required? My customer has asked me and I don't know the answers."

Answer: "I don't know. I'd refer the customer to the Department of Highway Safety. I can help you with the insurance issues surrounding the ownership of a golf cart, but not the registration issue."

2. Swimming pool: "I insure a homeowners association. Does the swimming pool have to meet the requirements of the Americans with Disability Act?"

Answer: "The best source is probably a local building official or a swimming pool company; I'd refer the customer there. Did you have a question about coverage under a CGL policy for the pool?"

3. IRAs and life insurance cash values: "I am quoting an umbrella for a customer. He has asked me if he were to get sued could the plaintiff take his IRA and cash value from his life insurance policy?"

Answer: "That's a question to be answered by an attorney; I'd suggest to the customer that they consult with their attorney. Did you have a question about coverage under an umbrella policy? If so, I can help with that."

4. Garnish wages: "A coworker and I disagree on an issue. She just sold her house and says she no longer needs to carry an umbrella. (WHAT?) She said that if she got sued a judge could not garnish her wages. Could that happen?"

Answer: "Your coworker should ask a judge that question. Now, let's talk about the need to carry an umbrella even if you don't own a home."

5. Auto lease: "My customer owns a car and wants to lease it to his company and add it to his business auto policy. Does FAIA have a sample lease we can provide to the customer?" (I swear this was a real question.)

Answer: "No we do not; that's for an attorney to draw up. Now, let's talk about the serious insurance mistake the customer is about to make."

6. Condo drywall: "I insure a condominium and they have to tear out the drywall to repair a pipe that is deteriorating. There is no insurance claim, but they have asked me who has to pay for the drywall. I want to be helpful to my condo association, so what's your view of who has to pay?"

Answer: "My view is that this is not an insurance issue, and an insurance agent should not be involved. The issue is between the board and the unit owner. If there had been a covered cause of loss generating an insurance claim I could have helped, but this is not an insurance issue."

7. The kid's car: "My customer's son is 19 years old and dad wants to put the car in the kid's name, and write an auto policy with low limits. The kid is over 18 and the title is not in dad's name any more. Dad has asked if he can be sued if the kid injures someone?"

Answer: "You know the saying that anyone can be sued for anything. Whether such suit would result in success is ultimately up to a judge or jury. I can, however, discuss the serious insurance gap that is about to be created."

8. Form of business ownership: A few years back when my daughter was only 25 she called me saying, "Dad, Beth and I are going to start our own speech therapy business." After the initial shock passed (she was only 25 and planning to start a business!), I said to her, "Let me know a month in advance and I can get the insurance going for you." A week or so later she called back saying, "Dad, how should we organize this thing? Should we incorporate, be a LLC, a partnership, or something else?"

Dad's answer: "I don't know, Leslie. Ask Robert, he is your corporate attorney. Once you and Robert figure it out let me know and I'll run with the insurance issues."

9. Condominium: "I have a condo association where a unit was sold by one individual and bought by another individual in May of this year. In July, the new unit owner wrote to the property maintenance company that the bay window in her master bedroom does not close property and the sliding lock does not secure the window. She called a window company and their assessment was that the window was not level or plumb and the entire system needs replacing to the tune of $6,500. The association has asked me who has to pay for this repair?"

Answer: "This does not involve insurance and the board should consult with their property manager and/or attorney."

10. Vehicle registration: "Is it possible to register the vehicle that is garaged in California and a vehicle garaged in Chicago without physically bringing each vehicle to a Florida Tax Collector or DMV office?"

Answer: "Refer the customer to the local 'tag office' so they can get the answer. Then, if the vehicle is registered in Florida and thus requires a Florida auto insurance policy, you can take care of that aspect for the customer."

Remember, stick to your area of expertise. i.e. insurance. Don't get sued by trying to be too helpful to your insurance customer.

Last Updated: October 13, 2017