Every time we attend an errors and omissions seminar, the attorneys tell us that documentation is the primary defense used to win cases against clients who have inadequate coverage. We know we should be documenting every office visit and phone conversation with an insured, but do we? I don’t want to tell you how to run your business, but here are some suggestions that may be beneficial to your agency.

Management systems have made it much easier to attach documentation to client files. If you have a management system in place, instruct your employees that they are to open the management system as soon as they get to their desk in the morning, and leave it open until they leave in the evening. If the program is already open on their desktop, the habit of documenting the file is much easier to master. It also makes it easier to track who is actually adding notes to client files. If you don’t have a management system, everything should be written down and attached to the insured’s paper file.

Although following up with a note or letter to the insured is desirable, it is not feasible to do on every call during the busy day. I have found that going back to the documentation is very useful when a problem arises. Make sure the date and time are on the note if you are using papers files. It is much more effective to tell a client, “I spoke to you on October 6th at 11:15 about this, and gave you the additional premium for the coverage. My notes say you were going to speak to your spouse and get back to me.” Isn’t that better than telling a client, “I spoke to you sometime last month, and never heard back from you?” The more details in your annotation, the better your defense in an E&O suit. If it is a particularly lengthy conversation, on the phone or in person, cite the amount of time spent discussing the topic.

If you are discussing a coverage particular to a certain type of risk, especially on a commercial account, then follow up correspondence is needed. If a furrier wants liability coverage for his establishment, but declines furrier block coverage, this needs to be confirmed in writing. He may say that he only needs coverage while he’s working on someone’s fur coat, but not if he’s storing it. Once the fire destroys his customers’ coats, he’ll forget about the seven conversations you had with him about the better coverage. You should have notes with dates and times in your files, but in this case you should also have the copy of the letter you sent to the furrier that explains the additional coverage and that he declined it. A letter signed by the insured indicating his refusal is the best documentation. I have done this on flood insurance where I know the insured’s home is near the water. However, most clients are either too lazy to return the letter or too smart to put their declination of coverage in writing. At least I have proof that I discussed the lack of flood protection documented in my file. If you have a management system, there is no excuse for not adding a note to a client’s file when you speak to them. You don’t even have to leave your chair to do it. Putting a note in a paper takes a little more discipline, but is just as important. Don’t get caught in an E&O claim because you were remiss about documenting a conversation, and train your staff to do the same. The agency you save may be your own.