When may a client initiate a lawsuit against an insurance agent?

Insurance agents may face risks of professional malpractice if a client alleges negligence or a breach of duty. When a client seeks out your distinctive and individual skills, he or she may hold you to a higher standard than a large corporate entity.

Believing that you perform better than your competitors, a mistake may result in a legal action if a client experiences financial harm. According to Business.com, common professional negligence actions include claims of an agent misrepresenting the need for coverage or costs of an insurance policy.

How may I reduce the risks of professional malpractice litigation?

If you do not carry protection for professional liability, you may wish to consider including it in your existing coverage. An honest error or omission may lead to a financial hit if a client alleges a mistake and seeks damages for an economic setback or a physical injury.

A plan for dealing with professional errors or omissions may protect you and your agency from a negligence lawsuit. Your liability protection may include common mistakes such as missed deadlines, inaccuracies and oversights.

How may an innocent error result in harm to a client?

You may wish to consider increased protection to cover issues that might result from software or equipment failure. If a preferred email software, for example, contained a glitch that unintentionally sent a virus to a client, it could lead to a claim of negligence. An affected client may seek relief for a loss of sensitive electronic data.

In addition to issues caused by technology mishaps, unforeseen market factors may result in an insurance company changing its policies and coverage limits without notifying its agents. Your clients, however, may place the blame on you because of an established relationship. Protecting yourself from allegations of professional negligence may reduce the risk of loss to your business and reputation.