Binding Authority and Procurement of Coverage
Agents are often guilty of failing to read and periodically review their agency agreements with companies. These agreements are often convoluted and difficult to understand. But they contain the essence of the agent’s authority to place coverage on a company’s behalf. And when an agent violates his agreement and a claim results, he is often left to deal with the uncovered claim through his E&O insurance.
A quality agent will post a summary sheet of his binding authority for the benefit of all agency personnel. He will document discussions with underwriters about approvals for coverage.
Quality agents know their product and their companies. Knowing your product means being familiar with policy language, including the insuring agreement, the extensions and exclusions. Knowing your companies means staying current on their financial condition and knowing their guidelines for underwriting and binding coverage.