It has been several years since we have written about the importance of using insurance coverage checklists. Recently, we have received a number of questions from various insurance agencies and brokerages about the use of insurance coverage checklists. Accordingly, in this issue of The E&O Report, we will review how insurance coverage checklists should be used by an insurance agency or brokerage and the many benefits that they provide when they are used on a regular basis.

 The primary benefit of using insurance coverage checklists is to help protect an agency or brokerage from E&O claims and lawsuits being made by customers on the basis that coverages were not offered to them. An insurance coverage checklist can prove to be a valuable piece of documentation if an insurance agency or brokerage is forced to defend itself against an E&O claim made by a customer that it failed to obtain a particular type of insurance coverage to cover a loss. In fact, some professional liability insurers specifically ask on their applications whether the insurance agency or brokerage to be insured under the E&O policy regularly uses insurance coverage checklists. This question is asked because E&O insurers are aware that coverage checklists can be instrumental in defeating an E&O claim based upon allegations of failure to procure coverage. For this reason alone, every insurance agency or brokerage should implement a procedure pursuant to which insurance coverage checklists are used consistently by all employees when they are reviewing possible coverages with customers and potential customers. 

 Another benefit of using insurance coverage checklists is that they help ensure that consistent information is being provided to customers no matter which employee, or which office location, of the agency or brokerage they are dealing with. When regularly used throughout an agency or brokerage, insurance coverage checklists help provide consistent customer service to all customers. 

 An additional benefit of using E&O coverage checklists is that quite often they will have the customer think about coverages or exposures that they had not originally contemplated. When this occurs, customers will often purchase insurance for risks or exposures that they had not planned on insuring, which then helps the agency or brokerage sell more insurance. This factor not only helps protect the customer by providing insurance for something that they did not originally consider insuring, but it also increases the insurance sales of the agency or brokerage. 

 There are countless sample insurance coverage checklists that are available for insurance agencies and brokerages to use. Big I NY and IIABA both have sample insurance coverage checklists for commercial lines and personal lines that are available for members on their web pages. Additionally, The Big Book of Form Letters and Other E&O Tools" published by Big I NY contains several sample checklists, as well as many form letters, disclaimers, and other useful information. This form book is available for purchase in either electronic or paper versions on the Big I NY website. 

However, as each agency or brokerage has its own unique type of business and areas of specialty, there is no one form checklist that fits the needs of every agency or brokerage. An agency or brokerage that seeks to implement the use of insurance coverage checklists should carefully review the various forms that are available and then modify the forms to fit within the parameters of how that agency or brokerage operates and the types of customers that it has. One important question that every insurance coverage checklist should have, is a catchall question at the end asking the customer whether they have any other insurance or risk that they would like to discuss other than what was reviewed with the agency or brokerage on the checklist above. This type of question puts the burden on the customer to affirmatively request information concerning anything that was not specifically reviewed with the agency or brokerage.

 Insurance coverage checklists should be used when discussing insurance coverages with both insureds and potential insureds either on the telephone, or during virtual or in-person meetings. If the coverage checklist is reviewed in person with a customer, a good practice is to have the customer complete and sign the checklist to acknowledge that the coverages were reviewed. If a checklist is reviewed instead with a customer over the telephone or during a virtual meeting, notes of that discussion can either be made on the checklist form or in the agency management system. Once the coverage checklist is reviewed with a customer or potential customer, the agency or brokerage should be certain to save the checklist in the customer's file. When insurance coverage checklists are used by an agency or brokerage, one of the most important things to require is that they are used consistently by all employees on a regular basis. 

 The benefits of using checklists are recognized in many industries. For example, an endocrine surgeon named Dr. Atul Gawande published a book several years ago titled The Checklist Manifesto. The New York Times review summarized the book's message as follows: The book's main point is simple: no matter how expert you may be, well-designed check lists can improve outcomes (even for Gawande's own surgical team)." If checklists are good enough for jet pilots and surgeons, they should be good enough for insurance producers.

 For all the reasons discussed above, the prudent insurance agency or brokerage should make certain that all employees are consistently using insurance coverage checklists when discussing coverages with customers and potential customers. In our experience, insurance coverage checklists are one of the best E&O loss control practices for an insurance agency or brokerage to follow because they not only provide E&O protection, but they also help a customer identify risks and exposures that they may not have originally contemplated, which, in turn, will often help the agency or brokerage sell more insurance.

Submitted by:

James C. Keidel, Esq.

Keidel, Weldon & Cunningham, LLP       ​