Canadian Underwriter

The perils of highlighting key points in a policy

February 22, 2021   by Greg Meckbach

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Home insurance policies may be so long that consumers won’t read the entire thing, but it doesn’t mean that brokers should selectively highlight certain policy terms to clients, a brokerage leader warns.

“For us, there are things we need to point out to customers — when coverage changes [on renewal], in particular,” said Steve Earle, president of Bedford, N.S.-based Bauld Insurance Ltd., in a recent interview.

The context of the interview was a tendency for some consumers to complain that their home insurance policies are more than a dozen pages. But then those same consumers learn the hard way (during a claim for example) about certain policy terms (such as seepage exclusions) that they did not read when they first got the policy.

So Earle was asked whether brokers should highlight certain parts of a policy. Brokers do indeed need to let clients know when terms and conditions change on renewal, he suggested.

But generally, what is important to one consumer may not be important to another consumer. “As brokers, we need to make ourselves available for discussions about those meaningful things to those individual customers,” he said.

A broker who decides to highlight certain parts of a policy, to a client, could be starting down a “slippery slope,” warns Earle.

This is due to the potential errors and omissions exposure if a broker picks out three or four parts of the policy to highlight, and decides not to highlight 25 or so other parts of the policy that could also be important, depending on the individual customer’s situation.

“If we began a process of trying to cover every possible scenario that would be or wouldn’t be covered in the policy, it would end up being as long as the policy,” said Earle.

If a customer is concerned or confused because they have a policy that is long and complicated, that customers should call their broker and ask about certain things that are important to them, he suggested.

Feature image via Solodkaya

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1 Comment » for The perils of highlighting key points in a policy
  1. Josie says:

    Unfortunately, this is a “Catch-22” for brokers. Judges have ruled they are the experts and that it stands to reason that clients may not read their policies, so it is incumbent on brokers to explain the policy to them. If the broker only answered questions on areas of concern, and a claim arose out of some other area of the policy that precipitated a lawsuit, the broker would be sued for not bringing it up.

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