Having Errors & Omissions coverage protects you when claims are filed, but you can take steps to reduce the likelihood that claims will be filed in the first place.
We’ve assembled some tips to help prevent a professional liability claim. The first five in part 1 are about direct client interaction. In part 2 there are five additional tips on avoiding an E and O claim that are about general business practices or professional standards.
1. Fact-Find First
Take time at the outset to get a full view of a new prospect’s situation. Ask enough questions to get the big picture, and document all relevant facts. Carefully assess the client’s risk tolerance. This not only helps you select the most appropriate products or course of action but also establishes expectations for future results.
2. Educate Clients
Never assume clients have the same understanding about products that you do. If anything, go overboard in explaining a product and how it is intended to work. Don’t be shy about repeating yourself. Make sure clients understand what a product does and does not cover, the terms and conditions, and all associated fees and expenses.
3. Document Everything
Document every conversation, whether on the phone, in person, or by email, with the client. Log entries should include decisions made and why, coverages declined or whether the interaction was an update or quick check-in. No client interaction is trivial. There is perhaps nothing more powerful in defending a professional liability claim than a fully documented file.
4. Connect Recommendations to Needs
When you do make recommendations, make more than one and make sure they are suitable for your prospect’s needs. Once he or she agrees to buy, verbally review the reasons underlying the purchase. Have your client agree in writing.
5. Resolve Complaints Promptly
Do not ignore an unhappy client. If a client is unhappy, find out why. Try to resolve complaints before they become a regulatory or legal issue.
Common sense and commitment build a culture that benefits you, your associates and your clients. Create systems within your business so these steps become part of the company’s DNA and feel effortless.
Please share your ideas if you have come up with strategies you’ve used at your business to prevent claims!
This article/blogpost is provided for informational purposes only, does not necessarily represent Aspen’s views, and reflects the opinion of the authors in light of market, regulatory and other conditions which may change over time. Aspen does not undertake a duty to update the article/blogpost.