By AgencyEquity.com
They are words many insurance agencies use on their websites. “The right insurance coverage.” “Best price.” “Trusted advisor.” “Sleep better at night.” “Quality insurance.” When coverage does not meet a client’s expectations, words like that can get an agent sued.
A Kentucky man contacted an independent insurance agency for coverage on his six cars after visiting its website. He requested “complete” coverage on four of them and liability coverage only on two. Among the four to be given “complete” coverage was a 2011 BMW. He faxed a spreadsheet to a producer at the agency showing:
- Each vehicle
- The associated driver
- The deductible
- Whether it was to have “comprehensive” or “liability” coverage
The producer sent him an insurance application with the vehicle information pre-filled and quoted premiums for each coverage. The relevant fields on the application showed premium charges for the coverages and a deductible for Comprehensive coverage. The fields for Collision coverage associated with the BMW showed neither a deductible nor a premium charge. The two cars being insured only for Liability coverage also did not have entries in these fields.
He completed the application and obtained a policy. At some later time, his wife asked for Collision coverage to be added on one of the other cars, a 2007 Mustang.
Fourteen months after first buying the policy, the insured had a collision while driving the BMW. He submitted a claim to his insurer for $14,064 in repair costs, but the claim was denied because he had not insured the car for Collision. Believing that “Comprehensive” coverage included Collision, he sued the agency for multiple alleged offenses.
The trial court ruled in the agency’s favor, finding that:
- The insured had a duty to read the insurance policy he bought
- His request for “best” or “complete” coverage was too generic to mean a request for optional coverage
- He couldn’t prove that the producer misrepresented anything
- There was no contract requiring the producer to obtain Collision coverage
- He didn’t pay anything extra for coverage advice
Apparently believing a $14,000 uninsured loss warranted spending more on litigation, the man appealed. He argued that the agency’s website and correspondence with him “lured him in” by advertising the agents as “insurance advisors” who created relationships based on trust.
The agency’s website described an ideal customer relationship “where you know you’re getting quality insurance coverage so you can sleep better at night. … With over 33 years of experience, our job is to simplify the shopping process so that finding the best … insurance at the best price is quick and easy. … (W)e offer many choices with our wide selection of … carriers which increases our likelihood at finding you the right insurance coverage …”
The appellate court ruled that these statements described the agency’s ability to shop for coverage and did not guarantee specific coverage. “The ‘right insurance coverage’ will vary widely between consumers,” the judges wrote, “depending upon their comfort with risk and the amount of money they wish to pay.”
Noting that the insured apparently misunderstood what Comprehensive coverage was, they wrote that he “proceeded at his own peril” by not asking for clarification or reading the policy and asking questions. “A request for ‘complete’ coverage will not be treated as a request for every optional insurance coverage available.” Rather, he was bound by the application he signed that showed no deductible or premium for Collision coverage.
The website statements probably seemed like innocuous hyperbole when the site was developed, but an agency can never know how a potential client will interpret those words. In addition, the producer assumed that the insured knew what he was asking for when he requested “comprehensive” insurance. This does not excuse his apparent failure to review the application he signed or the policy he bought, but it does illustrate the hazards website language can create.
Balancing effective advertising against errors and omissions liability risk is tricky. As this case shows, however, it is a balance every agency must strike.
