It’s difficult to watch any sporting event on television these days without being bombarded by ads from insurance companies that have sponsored the event who claim that their agents will act “like a good neighbor”, “protect you from mayhem”, and “be on your side.”
But the fact is that most people never actually read their insurance policy until they actually have a claim, but instead rationally assume that their insurance agent knows what insurance coverage they should have and that they in fact have this coverage. Unfortunately, this is not always the case.
Although many laws in Indiana favor the consumer, insurance law regarding the duties and obligations of agents does not. In Indiana, an agent has no legal duty or obligation to recommend specific coverages for their customers unless the insured can provide evidence of an ongoing “special relationship” with the agent. This “special relationship” has been defined by Indiana courts as consisting of evidence of a long standing relationship, reliance upon the agent, and a representation of the agent’s expertise that the customer relies upon. Merely telephoning an insurance agent and asking what coverage they recommend is likely not enough to establish an obligation on behalf of the agent to properly advise the customer.
In addition, if the agent fails to recommend or provide coverage for their customer, a two-year statute of limitations for any legal claim against the agent starts to run when the policy is delivered to the customer rather than when a claim arises. A common complaint that I have seen against an agent arises from a lack of sewer back up coverage on a homeowners or business policy. This is very inexpensive coverage that insures against a backup of sewage into a home or business from a city sewer system.
One would think that such coverage would be part of every homeowners or business coverage since it is so inexpensive. However, if an agent failed to recommend or provide this coverage, a two-year statute of limitations on any claim against that agent would begin to run when the policy was delivered, rather than when a claim arose and it was discovered that no such coverage was provided. In addition, if there was no “special relationship” with the agent, the agent would have no legal duty to advise their customer that they should have this coverage.
So how can one protect oneself? First and foremost, the best advice is to read your policy when you receive it, especially the declaration page where types and amounts of coverage that are provided by the policy are listed. If you don’t understand something, call your agent and ask them to explain it to you.
Secondly, do some creative thinking about what claims are the most likely to happen, and ask your agent if you are covered for this. For example, if the pipes in your house freeze and burst during the winter and flood your house while you’re on vacation, what damage is covered by your policy?
If a tree limb falls on your house, are you covered for this damage? I’ve seen policies that provide coverage if a tree falls because of wind, but excludes coverage if a tree limb falls due to ice. What damages are covered by flooding from heavy rain is also a good topic to discuss with your agent. If in doubt, ask!