Q: If a customer declines coverage, how long does their declination stand for? Should the agent offer the declined coverage every year or even every other year?

Response 1: From my work with attorneys, plaintiffs and errors & omissions defense, everyone says the same thing: More documentation is better.

There is no one single perfect solution here, and your agency's workload must be considered. Perhaps the gold standard is to contact customers annually, review all the coverages and have them sign off on rejections each year. The problem with that is it increases your workload and you run the danger of missing a year of contacting the person—then that becomes a problem.

The key is to offer the coverage the first time, maintain those quotes and document that you did offer the best coverage. If the customer rejects that coverage, save that documentation. Then, perhaps every year or two at the most, get in touch with your customers to review their coverages. Reinforce their decision to reject a coverage earlier, offer a quotation again and recommend it again. If they decline, document that. Whether you have a sign-off every single time is up to your management.

Response 2: It's a question for your E&O carrier and your attorney. It's a legal question, but an excellent one. Once you have the answer, incorporate it into your customary practice. Whatever that practice is, you'll get into trouble if you deviate from it.

Response 3: In the age of cut and paste, why wouldn't you remind insureds of prior coverages offered but not bought? While it is helpful for E&O, there's also the possibility of increased sales. I wonder how many agents send information to clients on losses in our industry that are not covered by their current insurance. What if only 1 in 100 decided they needed that coverage? It's a good return for a small effort.

Response 4: Whatever your decision, it must be consistent in today's litigious world. Speak with your E&O provider for additional reassurance.

Response 5: There is no magic answer here. If the coverage is significant, it might be wise to have them sign off annually when doing their renewal review. A rejection that is two or three years old might be viewed as still valid. If it's ten years old, not so much. 

A lot depends on the circumstances and the level of exposure to the risk that the coverage addresses. In creating written guidelines for your staff, it would be wise to lean toward one or two years.

Response 6: If they need it, a good agent should keep offering it. My agency offers flood coverage every year even though, depending on where you are, most agents aren't legally expected to offer much of anything.

Response 7: There's nothing wrong with a reminder every year at policy renewal. Have a list of purchased and previously declined coverages with pricing and have them sign off after a quick review. The renewal department can handle that easily. Forward-thinking agencies have reorganized workflows to call the customer each policy renewal to review coverages and policy issues like mortgagees or lienholders, drivers, insureds and more. It also helps with customer retention.

Response 8: If you document that the coverage was offered, and you are consistent with your agency practices, once is enough. If it is your agency practice to visit or otherwise communicate with your insureds on an ongoing basis and you become aware of changing exposures, offering the same coverage again is appropriate. You are an insurance agent, not a babysitter.

Response 9: To be safe, a renewal communication about logical coverages makes sense. Any recommendation that was made over three years ago is good for the plaintiff in an E&O case. Plus, things change year to year, so at least an annual check-in—even just an email or automated letter—is recommended best practice.

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

This article is intended for general informational purposes only, and any opinions expressed are solely those of the author(s). The article is provided “as is" with no warranties or representations of any kind, and any liability is disclaimed that is in any way connected to reliance on or use of the information contained therein. The article is not intended to constitute and should not be considered legal or other professional advice, nor shall it serve as a substitute for obtaining such advice. If specific expert advice is required or desired, the services of an appropriate, competent professional, such as an attorney or accountant, should be sought.